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HOGS NO LONGER THE DOGS OF THE COMMODITY MARKETS


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Be advised that all my comments are my OPINION and that OPINION is based on my long term in-house model that I dubbed LAWG 647. The prices I use in my model are week ending prices, usually Friday.BTW, trading commodities is risky and not meant for those that faint at the sight of blood.

SEPTEMBER 15, 2020

HOGS NO LONGER THE DOGS OF THE COMMODITY MARKETS

December Hogs have enjoyed a $17.00 rally from the low before breaking over $2.45 yesterday, Monday, September 14. This break was not a complete surprise as the Positive Indicator of the LAWG647 Model showed that December Hogs had entered Negative Equivalency. Simply put this means that the market had advanced to a point where the Positive Indicator suggested a higher probability for a correction existed. So what does the Model tell us?

As of Friday, September 11, December Hogs were (are) in an obvious uptrend. The Positive Indicator was at the 4th Standard Deviation above the long term average. Looking historically at the long term average Hogs had found resistance between the 4th and 5th Standard Deviation. We also know that it will take a close at or below $46.00 on Friday, September 18 to turn the trend lower.

What to do? I suggest looking for values to buy December Hogs, but show some patience as I believe a further correction is likely. Aggressive traders that are less risk adverse and willing to risk an additional $780 may wish to consider getting long December Hogs at $62.50, more conservative traders willing to miss the possible move higher may wish to hold out for $60.55.

If you are interested in our trading ideas you can go to our website and checkout Trades of the Week.

Lee Gaus is a founding partner of EFG Group founded in 1992 which specializes in servicing Introducing Brokers. Prior to founding EFG Group Lee Gaus, Tom Fritz and Steve Erdman all began their Commodity Futures careers with ADM. Collectively Lee, Tom and Steve have over one hundred years of experience in the industry.

International Futures Group (IFG) founded in 1994 is a sister company to EFG Group specializes in serving institutions, professional traders and individual investors.

We believe our experience and the development of the Model provide our clients, Introducing Brokers and individual clients a unique perspective. If commodity trading is what you do drop me a line atLee@efggrp.comor give me a call at 312-384-1166, or 1-877-304-1369. We will be glad you called and are confident so will you.



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About the author


Lee A. Gaus is a forty year veteran of the commodity futures industry.  After graduation from Illinois State University Lee began his professional career with Cargill of Minneapolis and then moved to Archer Daniels Midland of Decatur, Illinois.  After stints in the areas of animal nutrition, soybean processing and grain merchandizing Lee began specializing in commodity futures trading.  After being transferred to Chicago Gaus rose to the position of Senior Vice-President.  In 1992 Gaus was a founding member of EFG Group, and later International Futures Group.  Gaus has always had a deep interest in what appears to be the random movement of numbers.   Today Gaus combines old formulas with formulas of his own design in an attempt to discover fair valuations.  

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