Financials: Mar. Bonds are currently 16 higher at 119'14. This morning's Weekly Jobless Claims Report showed an increase in claims of 25,000 versus expectations of 17,000. CPI (consumer price index) rose 0.4% versus a pre-report estimate of 0.3%. The core rate was up 0.2% versus expectations of 0.1%. It looks to me after a spate of reports over the last couple of weeks that wholesale prices are out pacing consumers prices, i.e. firms are not passing on the full increase in wholesale prices to the consumer. How long will this last? Bonds are currently trading in the 119'16 resistance area. Support has risen to the 118'12 level for the near term. We remain long out of the money puts and/or put spreads in the June and Sept. 2012 Eurodollars as a long term strategy.

Grains: Yesterday Beans closed 2 cents lower, Corn unchanged and Wheat 3 lower after rallying sharply off their lows late in the session. Over night Beans were 13 higher, Corn 8 higher and Wheat 9 higher. I am still looking to be a buyer in May Corn below the 685'0 level if the market allows. Yesterday we were able to sell the combination of the May Corn 660'0 put and 740'0 call and collect 48'0.

Cattle: Yesterday Live and Feeder Cattle continued their recent rallies. I continue to remain on the sidelines awaiting a reason to go short. To be honest, I have been trading Cattle for more than 30 years and these prices are scary to me. I understand the underlying fundamentals that have brought the market to current levels and my gut tells me at some point we will see consumer resistance. That being said, my experience is that cattle are more price sensitive to supply fundamentals than perceived demand fundamentals. As mentioned yesterday I am starting to look at the short side of out of the money calls as a more viable strategy than shorting futures.

Silver: Mar. Silver is currently 9 cents higher at 30.72. I remain on the sidelines in Silver. We are now long the June Gold 1450/1500 call spread.

S&P's: Mar. S&P's are currently 3.50 lower at 1329.50. Support remains at 1313.00 and resistance at 1337.00. I continue to prefer the short side of the market.

Currencies: As of this writing the Mar. Euro is 10 higher at 1.3574, the Swiss 61 higher at 1.0496, the Yen 16 higher at 1.1986 and the Pound 31 higher at 1.6123. We remain long out of the money puts and/or put spreads in the Euro.

Regards,

Marc Nemenoff
Senior Market Analyst, Price Futures Group
Publisher, Nemenoff Letter
Web: http://www.pricegroup.com/commentaries_marc%20nemenoff.asp
Contact: 888.908.4310 | mnemenoff@pricegroup.com