Calling a Top in Lean Hogs

Commitment of Traders Report Confirms Seasonal High

December 4, 2012

This trade setup is merely a random sample of the day’s trades generated by COT Signals. To track our work their and receive all of our nightly trading recommendations, click here.

 

The February lean hog contract is being hit with bearish signals from every direction. Yesterday, we published a seasonal sell signal based on the recommendation of Moor Research and this morning we have a sell signal from COT Signals which, means there is considerable commercial selling. Finally, we have a technical trigger called a , “90-10.” This is described as a continuation play in Larry Connor’s book, Street Smarts and the method was developed by Linda Raschke. The 90-10 Low Continuation signal is fired when the day's trading closes within the bottom 10% of the day's range. It tells us that yesterday's late day move lower is likely to continue on into today.

Whichever method we use to view this market, seasonally, fundamentally or, technically they all point lower. We’ll sell February lean hogs and place a protective buy stop at yesterday’s high of 87.775.

Lean Hog Futures Top  

 

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ANDREW WALDOCK

866-990-0777

This information is not to be construed as an offer to sell or a solicitation or an offer to buy the commodities herein named. The factual information of this report has been obtained from sources believed to be reliable, but is not necessarily all-inclusive and is not guaranteed as to the accuracy, and is not to be construed as representation by Commodity & Derivative Adv. The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results.

 

Lean Hog Futures Reversal Keyed by Commercial Selling

Futures Trading with the Commitment of Traders Report

Commitment of traders report shows heavy lean hog futures selling.

July lean hogs have rallied more than 13% since the May lows. This has also been a textbook seasonal trade with July hogs rallying into early June and should sell off through the middle of July into expiration. The commercial traders have had their way this market, buying the May lows and now, selling the June highs.
Yesterday’s action was indicative of a technical top as the market posted a new high for the run yet, closed below the previous day’s low.
We’ll tie that into strong commercial selling as the Commitment of Traders report shows that they have shed more than 25,000 contracts in the last three weeks. We are selling July lean hogs and placing a protective buy stop above yesterday’s high at 94.00.

ANDREW WALDOCK
866-990-0777
This information is not to be construed as an offer to sell or a solicitation or an offer to buy the commodities herein named. The factual information of this report has been obtained from sources believed to be reliable, but is not necessarily all-inclusive and is not guaranteed as to the accuracy, and is not to be construed as representation by Commodity & Derivative Adv. The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results