GLOBAL ASSET MANAGEMENT
575 W. Madison, Ste 2607, Chicago, Illinois
(October 30, 1997) HOGS: The pork complex spent the past week fixed in a mostly sideways, but volatile trade as the market found early pressure from the weak cask but timing product markets helped spark late week gains. It appears everyone is getting what they want as the week ends as the hog run is ample so packers can kill near capacity, especially now that they have decent margins and the producers are also getting their back's scratched with the packers paying up for hogs. The cash market ended the week with hog tops quoted at $45.00 to $47.00 steady to a touch better than the precious week. The product sector also showed signs of life as some cuts started to gain ground which also sparked a continued rally in the dressed pork cut-outs. Overall, market internals are turning a bit positive and when one considers that the futures remain below the CME cash index it would appear a rally may be in order. The hog run this week has been heavier, but still not uniform and which might still indicate that runs will be light near term. Technically, December lean hogs are in a downtrend; the trend would turn back up on a close above $64.52.
FUTURES STRATEGY–Long LHZ at $61.77. Maintain a protective sell stop close only at $60.00.
OPTIONS STRATEGY–Short LHZ $60.00 puts at $.90. Maintain a protective buy stop at $2.15.
Tony Montini
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