MURICO.com Forum

The Final Purchase Index for - - -

8/6/14 was down -$1.16. The model projects that the CME Index component on the kill for 8/6/14 will drop by something like -0.80 to -1.10.

My screen is showing me that the HEQ4 futures are discounted to the Index component by 6.51. That is a record for this date with only 6 more trading days until we go to cash settlement. On average over the past ten-years the index has shown a little weakness from this date until cash settlement but it is only by -0.47. Not ONCE in the past ten years has the index dropped by anything close to six-points. The most it has ever dropped was -4.96 in 2009.

The CME Lean Hog Index is definitely in a down-trend. "The Market" says it is headed for 93.00 because that is where the ZZZs are trading. I wonder, "How fast will it get there?"

I think not fast enough to close the Index/QQQ gap so I am going to stick with a few QQQs to go to cash settlement. I had been waiting for another dip below 116.00 to buy the QQQs but this morning I gave up and added a few long QQQs at 116.40 and will scale on more as we go below 116.00, if that happens.

The morning reports show that packers were able to purchase quite large numbers yesterday with their lower bids. Producers seem to becoming motivated sellers at lower prices. The kill rate is not yet showing the usual fall surge but it will surely come.

Best wishes,

dhm