Lean hogs, an term used for butchered pigs regardless of paunch, has been trending lower on ample supplies and sluggish export demand since July 2014. These trends that the 'fundamentalist' define as a glut support the sellers during seasonal weakness.
Price
Interactive Charts: Lean Hogs CC, BCOMLH
A negative long-term trend oscillator (LTCO) defines a down impulse from 95.10 to 59.43 since the fourth week of August 2014 (chart 1). The bears control the trend until reversed by a bullish crossover. Compression (white circles) generally anticipates this change.
A close above 83.83 jumps the creek and transitions the trend from cause to mark up. A close below 44.53 breaks the ice and transitions the trend to mark down.
Chart 1
Leverage
A positive long-term leverage oscillator (LTLO) defines a bear phase since the second week of November (chart 2). This supports the decline (see price).
A diffusion index (DI) of 66% defines another bullish setup and Q1 accumulation (chart 3). A capitulation index (CAP) of 56% supports this message (chart 4). DI and CAP's trends, broader flows of leverage and sentiment from extreme accumulation (green dotted line) to distribution and extreme fear (green dotted line) to complacency supporting the bulls (red arrows), should not only continue to extreme concentrations but also restrain downside expectations until reversed (see price). The string of bullish setups tightens risk management for the bears.
Continuation of the decline under these trends, a sign of weakness (SOW), would be bearish for hogs longer-term.
Chart 2
Chart 3
Chart 4
Time/Cycle
The 5-year seasonal cycle defines weakness until the first week of February (chart 5). This path of least resistance restrains upside expectations (see price).
Chart 5