December 9, 2009

CME lean hog bulls fade as prices gap lower

February lean hog futures on the Chicago Mercantile Exchange on Tuesday gapped lower on the daily bar chart and hit a fresh three-week low of US$64.70. The hog market bulls have lost upside momentum and technical strength after hitting a fresh five and one-half-month high in late November.

February hogs on Tuesday also dropped into a key technical support zone located between US$64.80 and US$64.00. A close below US$64.00 would produce more significant chart damage to suggest a near-term market top is in place.

For the bulls to regain upside near-term technical momentum in lean hogs, they will first have to fill on the upside Tuesday's downside price gap on the daily chart. That means pushing February futures back to Monday's low of US$66.45. Above that key price level lies chart resistance at US$67.00, at US$67.50 and then at the late-November high of US$68.05.