(LH) Hogs Take Another Base/Reversal Step

Technicals, May 15, 2012; 9:15am

In 08-May's Technical Blog we introduced the factors that could contribute to a base/reversal environment in Jun hogs, including:

• the market's current proximity to the extreme lower recesses of the past 8-month range shown in the weekly log chart below amidst
• the lowest (44%) MRT Bullish Sentiment index since Sep'09 and
• the market's rejection thus far of the (83.55) 1.000 progression of Feb-Mar's 100.12 - 90.07 decline from 09-Apr's 93.60 high.

Yesterday's break above last Wed's 85.45 high confirms the short-to-intermediate-term trend as up and a bullish divergence in momentum that reinforces a count calling for at least a larger-degree correction higher, but quite possibly a recovery of surprising strength.

The daily close-only chart above shows the market's rejection of the exact 1.000 Fibonacci progression relationship of Feb-Mar's decline from Apr's high that warns the entire Feb-May break may be a 3-wave structure. And if this is the case, this market could really surprise to the upside as long as recent lows and support at 84.25 (tight) and 82.95 detailed in the hourly chart below remain intact.

Indeed, by virtue of yesterday and today's gains, the market has confirmed at least the short-to-intermediate-term trend as up, with a failure now below Thur's 84.25 low required to jeopardize the impulsive integrity of any developing bullish count and render the recovery attempt a 3-wave correction consistent with a broader bearish count.

Needless to say, the past week's recovery is of too small a sale to conclude a reversal of the major Feb-May decline. But while the market remains above at least 84.25 however, the short-term trend is up and may surprise by its scope. Per such a neutral-to-cautiously-bullish policy is advised with weakness below 84.25 required to warrant moving to a sideline position ahead of a possible resumption of the broader slide.

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