Robert Edwards'  Instablog

Robert Edwards
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Contrarian daytrading technician who specializes in micro scalping of stocks (using 1 minute bar charts), swing trading of stocks overnight, weekly stock option premium selling, pre-market and post-market psuedo market maker and stealth trading activity, and selling commodity option strangles... More
  • Time To Buy Lean Hogs? 0 comments
    Feb 28, 2013 12:20 AM

    April Lean Hogs have been in a freefall from $90.00 down to the current $81.00 price. The high of Friday, February 1st was just above 90, and now 4 weeks later, the low of just under 81 today, has been quite devastating for the pork bulls. As fast as the futures price has fallen however, the cash price has fallen even faster. With two winter storms recently, the cash market has failed to get any support and now the cash is slightly below the current futures price. However, this market is extremely ripe for a turn to the upside, at least for a $3 recovery back to $84.00.

    Export customers China and Russia are making a bit of noise and scaring the market. But even if 2013 pork exports fail to match the record 2012 exports, a lot of the bad news appears to be priced in at current levels. Any bit of positive news could get this market moving sharply higher in a hurry.

    For the past week I have been buying April Lean Hogs on every 50 cent to $1 dip and taking profits on small daily rallies. A less aggressive strategy would involve selling puts a few dollars out-of-the-money. Near-term support should come in from $81 down to $79 and so selling puts with $79 or $78 strikes look attractive. Although some are calling for a move down to $73 to $75, we have been down 4 weeks already, if you count Friday, February 1st as the first down week. I would not be surprised if we did not rally on Thursday and Friday, February 28th and March 1st, and cause a white candle to be formed on the weekly candlestick chart. June Lean Hogs are showing some bottoming action and so April should follow along shortly. Live Cattle has been trying to bottom some recently as well.

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