8/12/14 kill only dropped 1.05 putting the CME COMPONENT on the 8/12/14 kill at 117.37 leaving a gap of 2.82 between the Index and the QQQs. Tomorrow we get the first half of the cash settlement index with the other half to follow on Thursday's kill. The model is showing that the Index will have to drop 1.85 on each of those days to get the Cash Settlement Index down to 114.55.

Based on the fact that packers have quite a large number of more expensive hogs already purchased and the fact that we have not seen a daily drop close to a -1.85 for a long time, I think it is going to be a stretch for the Cash Settlement Index to get down to the level where the QQQs are trading therefore I will continue to hold long QQQs and will buy on another dip. I have scalped out of a few long QQQs this morning and bought back some.

The model in now projecting that the Cash Settlement Index will be 115.40 with a range of 114.90 to 115.90. I will not now sell more of the long QQQs until we get to 115.40 and will buy a few if we get a little dip.

Best wishes,

dhm