my cycles are screaming a volatility storm is brewing. This means reversals and counter reversals can happen quickly and frequently as we go into the seasonal direction changes between Aug 1 and Oct 1. This has not been a year of normal trading parameters in the livestock pits, so we should expect more of the unusual happenings. As I go back through my memory bank, researching Oct hogs, I find a few years where Oct hogs have established a bullish uptrend that held into the July timeframe with no major chart damage on the way up----------keep that bull market uptrend in place into expiration. It does have its 5-10 dollar breaks without doing chart damage but always seems to rise to the challenge of putting in new contract highs.

Something to be said for the 10 year cycle I see playing out in many of the markets this year. 2004 was the last time Oct hogs had a solid bull uptrend the 10 months of the contract year of trade. I expect the fall months to fall victim to the usual 7-10 dollar seasonal selling pressure during Aug after they get the 1st week in Aug surge riding the coat tails of the expiring Aug contract that has tried to stay in close range of the final 3 weeks of the July contract. The Oct deficit to Aug is already/usually is at weekly chart support and a huge deficit to cash when it becomes front month. I would think it would take an extreme increase in market hogs over the next 3 months to take cash and Oct futures below what should be solid support at 105 on the Oct chart. Possible and usually likely but this is the year of unusual, so unless PED losses prove to be a complete fabricated RUMOR it will be very hard to replace the 6-7% losses we are seeing in a 3 month time span. What if, the thought that the month of Oct shows another jump in PED market hog losses, we will have a repeat of the 2004 $15 rally Oct hogs ran the month of Sept 2004. This year the hog market has proven a $15 rally is easy to achieve even in counter seasonal time frames. I believe the counter seasonal will remain the rest of the year all the way to the expiration of Dec hogs.

The Oct hog chart shows a $20 leg from 80.00 in Oct 2013 to $100.00 in early March of 2014. A series of reversals and counter reversals for 3 weeks into early April. The last week of April it began the 2nd leg surge that has an incomplete target at 120.00-121.00. I have my plan drawn up and I'm betting on that 120.00 target being hit and maybe exceeded by Oct 1. I was expecting it to complete the leg with an Aug 1st surge but the market may take it down to 105-108 for a mid Aug low as it takes over front month. Oct hogs remain in an uptrend until it has 2 weekly closes below 105.00. I will be a seller of Oct hogs at 118.00-120.00 and a buyer at 108.00-109.00 area. I will not be making any guesses midrange 112-115.

I do have a couple buy stops(wanting to make sure I have some momentum working for me) at 105.55 on Dec hogs since it has a screamer look of needing/wanting to go to 108.00 to complete its upward pattern for an Aug 1st surge that could kick in this week.