8/7/18 was only down -0.89 to 62.78. Apparently packers had a bunch of more expensive hogs purchased that they opted to kill yesterday. The QQQs are now trading discount to the component by -7.53 with only five days of data coming in before we get the cash settlement index. The model calculates that the component will need to drop an average of -1.79 per day to close that "Gap". I am having a hard time imagining drops like that for the next five days. It has dropped an average of -1.37 per day for the past five days. It is tempting to buy the QQQs but conventional wisdom says don't reach for a falling knife!

The six-day moving average carcass weight was steady at 208.30#. That is +1.50# year over year. Packer hogs are lighter than non-packer hogs by -0.35#. Packers have done a very good job of getting current in their shipments.

It appears that I was asleep at the helm when we start the search for the "Trough" for this hog cycle and I have not traded it very well. I continue to think that we will hit both a seasonality low and a Hog Cycle low this fall. Cycle theory holds that producers and market participants always think that current prices remain indefinitely into the future. On that basis, then, I believe the summer futures will be pushed too low so I am piling a few on my boat and will HODL some and buy dips and sell rallies with some. This morning I have added three.

Best wishes,

dhm