June lean hog (HEM26) futures present a selling opportunity on more price weakness.
See on the daily bar chart for June lean hog futures that recent price action has formed a potential bearish double-top reversal pattern. See, too at the bottom of the chart that the moving average convergence divergence (MACD) indicator has just produced a bearish line crossover signal, whereby the blue MACD line crossed below the red trigger line.
Fundamentally, the selloffs in the cattle futures (LEJ26) (GFJ26) markets will likely continue to provide spillover weakness in lean hog futures. Also, the coming months tend to see hog slaughter levels rise. Also, keener risk aversion in the general marketplace has likely dented consumer confidence, which could mean less demand for red meat at the meat counter.
A move in the June lean hog futures below chart support at this week’s low of $108.35 would give the bears more power and it would also become a selling opportunity. The downside price objective would be $100.00, or below. Technical resistance, for which to place a protective buy stop just above, is located at $112.025.
IMPORTANT NOTE: I am not a futures broker and do not manage any trading accounts other than my own personal account. It is my goal to point out to you potential trading opportunities. However, it is up to you to: (1) decide when and if you want to initiate any trades and (2) determine the size of any trades you may initiate. Any trades I discuss are hypothetical in nature.
Here is what the Commodity Futures Trading Commission (CFTC) has said about futures trading (and I agree 100%):
Trading commodity futures and options is not for everyone. IT IS A VOLATILE, COMPLEX AND RISKY BUSINESS. Before you invest any money in futures or options contracts, you should consider your financial experience, goals and financial resources, and know how much you can afford to lose above and beyond your initial payment to a broker. You should understand commodity futures and options contracts and your obligations in entering into those contracts. You should understand your exposure to risk and other aspects of trading by thoroughly reviewing the risk disclosure documents your broker is required to give you.
On the date of publication, Jim Wyckoff did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
More news from Barchart
