August 7, 2006
I'll just throw this out there for any of you guys who ever make a straight-up chart trade.
Having seen the meat markets "routinely" make some enormous non-stop moves over the years, I have long considered the meats as oftentimes having more leverage than any futures contracts we trade....and right now, they look poised to perhaps make one of those moves.
No big story here...Just the fact that both Lean Hogs and Feeder Cattle made new contract highs today with small speculators net short both of them by more than a 2 to 1 ratio...Both markets are potentially breaking out of consolations and looking like they are ready to make a further leg up.
Could they stop here? Absolutely. Could they be another Corn...looking like they are breaking out, only to fall back hard? Certainly. But over the years, many of you have seen me present exactly this chart when the results ended up being just what we expected...that being a SOLID and sometimes dynamic move bull move out of here....
To me, this is the "perfect" chart...Doesn't mean it will always work...but it constitutes what I believe to be the best "odds" you find in this business....It is the epitome of one of my wall rules: The Best Way Is Going With It...especially in those cases when the little guys are seemingly looking for a top.
Lots of ways to do it. Prices are right. I also like the fact these options expire together with the futures contract...
Give me a call if you want to take a look at the idea...Charts and a few possible option prices follow...and if they are going, I wouldn't expect them to wait around...