March Washouts with this magnitude------those that have opened Sink Holes like this------have proven to be a sign of things to come and a deeper Abyss by the end of the 3rd quarter. I'm telling producers to expect a retest of the 2016 140-145 bottom $5 range. The weekly and monthly charts both have bearish Head & Shoulders formations in place. I don't ever recall both the weekly and monthly carving out that type of pattern. A $10 rally for May through August contracts may be all we get for upside off of the recent lows.
A lot of similarities between this year and 2009. Both years being a Cycle Reset year, the second year out from the 9 year cycle low. 2009 carved out a Head & Shoulders pattern during the first quarter on the weekly but not on the monthly because we didn't have year on year increased record production. The neck line support was not broken until Aug became front month in 2009. We have already broken the neckline severely but probably to early. Which indicates to me as a sign of things to come after we get the seasonal rally. In 2009(my second year as a Risk Manager) I had one producer out of 10 that toke my advice and he was rewarded with a $135,000.00 growth in his trading account. The other 9 begged to put hedges on at the bottom----the power of emotion at work.
The depth of the March Washout is an indicator to me, as to the implications of the record production that will remain as a knife in the side of the hog market. A major Bleed is still to come-----so says my Hallucinations that I've been preparing producers for since the beginning of the year. I'm hoping to get 50% participation but I have 5 guys that will be very aggressive with the Aug & Oct contracts, waiting for the rec to pull the trigger. They have done very well with the March Washout, even though the fishing lines got them on board after the party started. Then the fishing lines kept forcing their hedges back on after they were happy with the returns. They are BELIEVERS but I keep telling them it's mostly LUCK. The burden is on me and I can guarantee, I will be wrong when least expected. I'm sensing some Swelled Head Syndrome on their part and fighting some of that for my own. To keep their egos and my own balanced, my weekly lectures are centered around, "it's ok to be wrong, you just have to recognize and take action when that shows up". That's when some reply, "you're to wishy-washy you need to be more confident", until they experience it, they will never relate to the larger than needed donations I've put in others pockets.