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LIVE HOGS:

This is one of my favorite markets, both for larger managed accounts, as well as for smaller ones. Referring to Chart 1, note that the 40.50 level in October of 1983 gave us the perfect point to reverse shorts and go long, because all three categories had been satisfied, and they had been satisfied extremely accurately. First, the pattern was easily seen and easily delineated -- price completed two major waves down (A-A' and B-B') and was therefore in its third and final major wave down (C-C'). We knew that when this wave was halted, our big bear market would be at an end.

Where was it likely to halt? Since 1.618 of leg A-A' gave us precisely our objective for the length of leg B-B', then 1.618 of leg B-B' should give us our objective for the length of leg C-C'. This works out to 40.50. We now had two of our categories apparently satisfied -- We established that price was in a third major wave down, and that the proper maximum objective for this third wave was 40.50.

Our third category, the time cycle, then fell nicely into place. Price had completed a full 89 weeks from the previous major low in December of 1981, and a 55-week completion from the top of the market. Hence with the Fibonacci pattern at an apparent completion the Fibonacci ratios reached by the price objectives being met, and the Fibonacci time cycle completed, my analysis indicated that all market forces would combine to drive the hog market abruptly and dramatically higher; and this is what happened.

Now for a bit of ongoing prediction: Once this first wave-up we are now in has been completed, the ratio retracement should bring price back to about the $.46 level, which would be my next buy-in point for a second wave upwards. The reason is this: From the lows in the hogs at $ .29 during 1980, there have been two major waves upwards in the grand cycle (labeled I and II).. This implies that we must have a third major wave upwards to take out the $ .68 highs from a year ago, before the entire bull cycle will have been completed.

Now that you know we are likely to be in a bull market for hogs for the next year or so, it makes buying the dips a little easier; there should be plenty of room left on the upside, to say the least.