August Lean Hogs gap opened lower, making a new low
for the down move at 83.675. The breakdown tested support at the rising 200-DMA
now at 83.975 and it held as the market rallied almost 4-handles off the low to
the high at 87.625. The rally was finished by 10:00 AM CDT, drifting the rest
of the session to settle at 86.675. The rally took price past resistance at
87.10 stalling just below the Wednesday high at 87.875, which just happens to
the start of a gap formed with the high form Tuesday’s low at 88.30. So, a
collapse on Tuesday with a gap open lower to a gap open lower with a huge rally
that failed below the gap forming a Bullish Piercing Formation. Two divergent
patterns right on top of each other. When gaps form there is a general rule
that when closed, price will reverse in the direction of the gap, this rule is
the 80/ 20 rule. Where 80% of the time the market fails at the gap close. The
Piercing candle is a bullish candle formation which could lead to a bigger rally.
The battle begins on Friday between the two competing patterns. We’ll see… The
cash market remains weak and isn’t showing any sign of bottoming. The only positive
for Hogs right now in my opinion, is with the collapse in price we have seen,
it is due for a short-covering rally. A failure from settlement could see price
revisit support at 85.325. Support then comes in at the 200-DMA. If price can take
out resistance at 87.10, it could test resistance at the gap. Resistance is
also nearby at 88.325.
The Pork Cutout Index ticked higher and is at 94.53 as of 07/10/2024.
The Lean Hog Index increased and is at 88.67 as of 07/09/2024.
Estimated Slaughter for Thursday is 475,000, which is above last week’s
10,000 and last year’s 468,910. The estimated total for the week (so far)
is 1,890,000, which is above last week’s 1,429,000 and last year’s 1,855,180.
For those interested I hold a weekly livestock
webinar on Tuesdays and my next webinar will be Tuesday, July 16, 2024, at 3:00
pm. It is free for anyone who wants to sign up and the link for sign up is
below. If you cannot attend live a recording will be sent to your email upon
completion of the webinar.
**Call me for a free consultation for a
marketing plan regarding your livestock needs.**
Ben DiCostanzo
Senior Market Strategist
Walsh Trading, Inc.
Direct: 312.957.4163
888.391.7894
Fax: 312.256.0109
Walsh Trading, Inc. is registered as a Guaranteed
Introducing Broker with the Commodity Futures Trading Commission and an NFA
Member.
tested support at the
Futures
and options trading involves substantial risk and is not suitable for all
investors. Therefore, individuals should carefully consider their financial
condition in deciding whether to trade. Option traders should be aware that the
exercise of a long option will result in a futures position. The valuation of
futures and options may fluctuate, and as a result, clients may lose more than
their original investment. The information contained on this site is the
opinion of the writer or was obtained from sources cited within the commentary.
The impact on market prices due to seasonal or market cycles and current news
events may already be reflected in market prices. PAST PERFORMANCE IS NOT
NECESSARILY INDICATIVE OF FUTURE RESULTS.
All
information, communications, publications, and reports, including this specific
material, used and distributed by Walsh Trading, Inc. (“WTI”) shall not be
construed as a solicitation for entering into a derivatives transaction. WTI
does not distribute research reports, employ research analysts, or maintain a
research department as defined in CFTC Regulation 1.71.