Research shows that buying July Hogs between October 17 and November 30 has averaged a $1193 profit 14 of the last 15 years. Looking at the seasonal chart from Sentiment Trader from October 17 (day 290) until the end of November, gains are usually realized through May.
If one were to look at the cycles on lean hogs, you would see that the average length of an intermediate cycle is 25 weeks. The first week of November will mark week 25. You will also notice that the yearly cycle also tends to bottom in October.
The optimism index for hogs are nearing excessively pessimistic levels. This is what you want to see when contemplating a long futures position......a market which is running out of sellers.
The weekly stochastics and RSI oscillators are at extreme oversold levels. I expect they will turn up soon.
The contract size of one lean hog futures contract is 40,000 lbs. I think a mild estimate on how far prices can move would be .20 per pound. That would be an $8,000 gain!
I am not yet ready to pull the trigger yet but could by the end of the week. I would love to see a blood bath kind of finish to this yearly cycle to flush out any remaining longs. If this is the kind of trade which might interest you, I would recommend getting ready now. The margin for one contract is $1,200.
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