I really like the way lean hogs went down to 110.30 and tested gap support today. Some analysts would say a close below this level would be a disappointment. That didn’t happen today. It went down into the gap area and rallied back.
The United States Department of Agriculture (USDA) Hogs and Pigs report is scheduled for release Thursday afternoon. This quarterly report presents data on the U.S. pig crop for 16 major states and the U.S., including inventory number by class, weight group, farrowings, and farrowing intentions.
I like buying lean hogs into this gap area. One idea is to put a Good Until Cancel (GTC) order to buy August hogs at 110.20. Let it work for a few days. Risk the trade to 108.40 stop ($720 risk). If you do get a fill, a profit objective would be 115 even. Risking one to make two is a desirable ratio.
Create some good fortune with good luck for your trading account.
The second chart is a weekly chart of lean hogs. This is a five or six wave up. Looking at weekly charts helps us see the trend. It is clear, in my opinion, that the trend is going up.
Charts courtesy of CQG.
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Stephen Davis
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Walsh Trading
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