December lean hog futures on the Chicago Mercantile Exchange on Tuesday gapped lower on the daily bar chart and hit a fresh eight-month low. Very serious near-term technical damage has been inflicted the past two weeks, starting with a huge gap-lower move on Aug. 27 and followed by another big gap-down trade on the daily bar chart that occurred on Aug. 28.
The next downside price objective for the powerful hog market bears is to produce a close in December futures prices below technical support at the December 2007 low of $64.70.
The next upside price objective for the beleaguered hog market bulls is to fill on the upside Tuesday's downside price gap, which means pushing prices to the $67.40 level. Above that lies strong technical resistance at $69.45.
The hog market bulls can correctly argue that December futures are short-term oversold, technically, and due for a corrective price bounce very soon. In fact, the 14-period RSI reading of 22.67 is the lowest RSI reading in the history of the December 2008 futures contract. Any RSI reading below 30.00 does suggest a market that is overdone on the downside and due for at least a corrective price rebound very soon.