supply/demand ratio. If supply goes up without an associated increase in demand, the price will go down. If demand goes up without an increase in supply, the price will go up.

One of the exciting things about the hog market is the fact that the fundamental supply/demand information is far. FAR superior to that available in ANY other market.

What did we see that gave us a strong hint that the price of the QQQs was going up?

Well, we saw the following:

1. Seasonally there is a powerful tendency for the price of hogs to be strong in the summer months because the pig crop tends to be lower in the winter months. On 5/17/19 the CME Lean Hog Index moved up to 84.59 setting a seasonality high that has been holding, however the price of the QQQs has moved up to 86.775 suggesting that "The Market" now thinks we are still in the chase to find the seasonality high for this year.

2. When hot weather hits, hogs tend to lose their appetites which slows down growth thus slowing the rate that hogs finish and come to market.

3. On 5/31/19 the six-day moving average carcass weight was 216.01#. Today it had fallen to 209.13# giving us confirmation that hogs are finishing more slowly and the supply of market ready hogs is probably falling.

4. On 7/3/19 the price packers were getting for hog carcasses was 71.48. Today it was 81.43 suggesting that demand had firmed.

5. We have known since last August 2018 that a disease was ravaging the Chinese hog herd. My suspicion is that it spooked a lot of the back yard producers into liquidating their hogs for fear of suffering a complete loss. This liquidation initially put excess pork on the market and dropped the price. At some point this loss of production capability will surface as an intense shortage of pork. The firmness we are currently seeing in hog carcasses may be the first leg of increased Chinese demand.

6. Early each day I am able to calculate a Purchase Index that gives me a "Before-the-market-opens-hint" that packers have been bidding more aggressively for hogs and the up-trend in hog prices is alive and well.

7. In addition to the seasonality cycle, there is a Hog Cycle that runs from four to seven years in length. On 9/3/18 the CME Lean Hog Index dipped to 45.30 which was the "Trough" to this Hog Cycle. We are now in the chase to find the "Crest" to this Hog Cycle. The last "Crest" occurred on 7/16/14 when the CME Lean Hog Index topped out at 134.17. If the demand for pork in China blossoms to its full potential, there is a good chance that the "Crest" to this Hog Cycle will match the last "Crest" in the 130 range.

NO OTHER MARKET HAS THE DATA AVAILABLE TO MAKE A FUNDAMENTAL ANALYSIS LIKE THIS!!

NO!!

NOT ONE OTHER MARKET!!

This is not Rocket Science or Brain Surgery. Just nuts and bolts data collection and looking for the clues that only the hog market can give.

In the words of Yogi Berra, "You can observe a lot if you just watch!"

I hope this helps.

Best wishes,

Doc