WHAT GOES UP MUST COME DOWN. And hogs sure reminded us of that on Friday. With a gap down they swiftly took out their March 18 low. And are now suggesting another wave down on their daily chart.

Of course the first question that comes to mind is whether beef is going to do the same? But based on the daily chart, hogs and beef have a very different structure. They all rallied initially but that is where the similarity ended.

When they all topped out recently hogs had never gotten over their 20 avg. on their daily chart. In fact it was that average that killed the rally. But both live and feeders had easily cleared their 20 avg. with room to spare. It was only all those gaps under them that made them go back and start to clean them up. Its called good housekeeping.

The significance of where their rallies stopped could tell us a lot. As you recall in a down trend a market always trades under both its 10 & 20 avg. Every rally attempt is stopped by those averages. But when a market is changing trend, it finally clears both of those averages.

During their rally hogs never accomplished that. They were abruptly stopped by their 20 avg. and started to sell off. That indicated the downtrend was still intact. They proved that on Friday when they took out the March 18 low. So nothing had really changed for hogs. All they had was a rally in a bear trend.

But beef had cleared both of those averages in their rally - technically saying they were serious about an attempted trend change. And not only that, the initial rally in the hogs was only about 8.00. And that was after working several days in a range to get the momentum to do even that. Not so with the beef. They bottomed and were off and running the next day. The feeder rally was 3 times the hog rally and live double the hog rally.

So will beef take out their earlier March lows? They could but based on the technicals and their market behavior that probability is low. And this is a probability business.

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Zaner Group

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