by Gavin M.
So you wanna be a hog trader? Do you have a good life insurance? Livestock trading is NOT for the faint-hearted! The livestock complex is where boys become men and vice versa. It's a ruthless futures trading place where if you are not extremely sure about what you're doing, you will lose money quickly.
Let's talk about Hogs. It's been on a downtrend for more than a month now with no signs of letting up. People today got extremely excited about the short covering. Nobody knows if this really would be the bottom in hogs but let's take a closer look.
Sentiment - it is still bearish. Even with PEDv in the background, the carcass weights remain big enough to cover demand. With the expectation of having more supply coming in the fall, this can only reduce the hog prices.
Price action - you got to admit that hog prices went up so fast and markets have a great way of equalizing this. We came off on the heels of $80-$90 hog prices. So it should not be a shock that the 'bulls' try to level off here around $90 on the V futures.
Seasonality - there's a saying that livestock prices typically bottom into September. Will that be the case again?
Technicals - the charts below clearly show that the technical setup still belongs to the bears. The machines trading this chart do not care much about what's really happening on the ground. Machines can't think rationally. They scan for data online and compare it to what is good or bad and react accordingly.
I am still a seller of rallies until I get hit enough to really say I'm wrong. Until then, jury's out on whether the hog trade has finally reversed.
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