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For: Wednesday 06-02-2010

Rally Into Resistance

The lean hogs are trying to rally after a sharp break through support. What was support now becomes resistance. Looking at both of the charts I doubt we will see above the low to mid 8400’s on this run. On the bar chart this looks like a simple bear flag pattern and we will look to buy put options or sell futures if the market breaks down this week.

Aggressive traders may opt to use futures. As always please consult your personal broker at Great Pacific Trading Company to see if this trade is suitable for your account.

Trade Recommendation: On a 8212 print versus the August futures, this week, Buy the 80-76 put spread and sell the 90 call for a debit of 50 points on a limit. Risk 100 points on the trade initially. (>$400 not including commissions and fees), Look to take profits if the market trades to 7700.