When This Market Showed Its Power, Few Commodity Investors Were Prepared
Lean Hog prices just exploded to multi-month highs BUT the road to here goes back further than you might think; and the road ahead may not look the way you think it should
by Nico Isaac
Updated: January 28, 2022
If the last two years have taught us anything, it's that while you can't always predict a crisis, you should at least try and prepare for one. An entire movement of pre-planning has risen out of the ashes of the pandemic and the economic and environmental shockwaves that have sent civilization reeling like no other time in modern history.
Today, we have mandatory workplace and school drill practices, countless pre-made, meal-delivery services, and digital diapers that send text alerts before baby's bottom gets too... ripe.
The famous country crooner Dolly Parton says she now sleeps in full makeup just in case she's awoken in the middle of the night by some event and is forced to leave the house.
And in Churchill, Canada, locals keep their car doors unlocked in case anyone needs to make a quick escape from a polar bear attack.
But as we go back to the drawing board and tweak our pre-pandemic plans for weathering big changes, many traders and investors are still stuck in the past. They continue to rely on the old, mainstream strategies for anticipating big price changes.
That strategy being: Follow the news for cues on where the market is going next.
Take, for instance, the recent changes in lean hog prices. On January 22, hogs soared to their highest level in three months after clocking their longest winning streak in a month. Recent headlines seized the move:
- "Hog futures rally to highest since mid-October" (Jan. 21 The Western Producer)
- "LIVESTOCK-CATTLE AND HOG FUTURES FIRM; SUPPLIES REMAIN TIGHT" (Jan. 19 Reuters)
- "Pig Outlook: Lean Hog Futures Bulls Show Solid Power" (Jan. 22 The Pig Site)
As for what caused that solid power, the January 22 report credits several news drivers:
"Signs of strengthening cash hog fundamentals and retail demand are pushing futures prices higher.
"Pork supplies have tightened amid Covid-related slaughter plant slowdowns.
"Lean hog market bulls expect seasonal price strength as well, amid seasonal hog supply shortfalls.
"Rising inflationary expectations also are supporting lean hog futures." (thepigsite.com)
In truth, none of these factors prepared traders for the latest bullish power in hogs. Each one is related to the Covid pandemic and has dominated livestock markets since 2021. And yet, as this chart of hog prices shows, the market trended sideways for four straight months between June and October.
It was then, in the final days of last October, when the real bullish power began to show in hogs, via the Elliott wave pattern underway on our price charts of the commodity.
Here, we return to October 29, 2021. On that day, our Daily Commodity Junctures editor Jeffrey Kennedy showed this chart of hogs, which placed prices at the end of a multi-month-long counter-trend move. In Jeffrey's words:
"We have a very nice pattern underway. We appear to be moving above key resistance right now at 79.47. If we can clear that level, and I think we should, I would view this counter-trend move complete and have my sights set on a move up.
"Again, we need to see strength above 79.47 while holding above 71.8. If all that comes to pass, we'll be seeing something to the tune of this moving forward... toward 96.52."
From there, hogs began a slow and steady climb higher into the new year. On January 10, our Daily Commodity Junctures set the stage for a long-awaited upside breakout. There, Jeffrey showed this chart of the market alongside an "immediately bullish case as long as 83.12 stays intact."
And, this last chart captures the powerful surge that followed:
As for where hogs are headed now?
Well, in the January 24 Daily Commodity Junctures, Jeffrey features hogs in his "Select Market" segment. There, he presents multiple prices charts and detailed analysis of the technical signatures and Elliott wave patterns underway.
In Jeffrey's words, "the most logical path for prices to take moving forward" is higher... so long as they obey critical support. Jeff also reveals why February 15 might be an eventful date for hog bulls.
For traders and investors, a whole new year is stretched out before you. And so too lies the opportunity for an entirely new way to stay prepared for big changes in the markets you follow.
That way is our Commodity Junctures Service.
Be Prepared for Big Changes in Commodities
When the mainstream experts announce the "dawning" of a new trend, it often signals the arrival of dusk -- because, by the time the public catches up to a new trend, often it's already been in place for weeks or months.
Try to catch new trends before they emerge, by looking to the patterns of investor psychology.
Our Commodity Junctures updates you on the short- and long-term wave outlooks for the major players in softs, food, grains, livestock, energy, and more right now, 16+ major commodities in total.
Plus, for a limited time, you can get instant access to Jeffrey Kennedy's Commodity Outlook 2022 -- Free! In this just released 1-hour video, you'll see comprehensive, short, intermediate and long-term forecasts for coffee, cocoa, sugar, cotton, soybeans, corn, wheat, lean hogs, live cattle, crude oil, gold and the U.S. dollar.
Euro Stoxx 50: Sentiment Hits “Bellringing” Extreme
This European sentiment measure was at an extreme for the better part of five years. Now, it appears the tide is turning. Be prepared! Optimistic or pessimistic extremes are usually followed by an extreme in the opposite direction.
EUR/USD: From 2-Year Highs to 2-Month Lows. Press “Pause” on the “Fed Pause.”
On May 3, the world's most heavily traded currency pair, the euro/U.S. dollar soared to its highest level in 2 years. Mainstream experts focused on the Fed. Expectations of a "pause" in rate hikes would keep the wind at the euro's back. But that's not what happened. And here's why.
See What Happens When the Fed's Rate Hikes Stop
See our seven-decade chart that shows what happens when the Federal Reserve ends the cycle of interest rate hikes.