Financials: Dec. Bonds are currently 1 higher at 143'21, the !0 Yr. Note 2 higher at 130'20 and the 5 Yr. Note 1 higher at 123'01. These markets have continued to benefit on the upside from a flight to safety from European debt markets. My opinion is that this won't last forever and I am only willing to take a small risk at this time until I see some downside technical confirmation that rates are headed slightly higher, consequently the price of the underlying instrument will be heading lower. At the moment I am recommending some coservative strategies: 1) the long 5 Yr. Note/ short 10 Yr Note spread. 2) being long out of the money puts and/ or put spreads in either the Bonds or 10 Yr. Notes for Jan. or March expiration.
Grains: Yesterday Beans closed 20 cents lower, Corn 12 lower and Wheat 6 lower. Over night Beans closed 1 higher, Corn steady and Wheat fractionally higher. At the moment we are long March Corn with a protective sell stop at 586'0. If this market should rally above 620'0, raise your sell stop to the 598'0 level.
Cattle: Yesterday Feb. LC closed fractionally higher at 121.80 and Jan. Feeder Cattle 125 lower at 146.17. I continue to have a negative bias on both Live and Feeder Cattle. If you are short Live Cattle futures consider selling out of the money puts against your futures position as a protective measure. I would recommend strike prices of 118.00 or lower. Short hedgers in Feeder Cattle should be looking for hedging opportunities on contracts through Aug. 2012.
Silver: Dec. Silver is currently 84 cents higher at 31.96. If you remain bullish consider out of the money calls and/or call spreads for March 2012 expiration.
S&P's: Dec. S&P's are currently 2.00 higher at 1193.00. Support in the 1185.00 area is holding for the moment. If you went long at this level consider either taking the short term profit or using a protective sell stop at your entry level. Resistance remains in the 1216.00 area.
Currencies: As of this writing the Dec. Euro is currently 32 higher at 1.3528, the Swiss 42 higher at 1.0954, the Yen 21 lower at 1.2983 and the Pound 10 lower at 1.5631. We remain short Yen futures. I am also recommending puts and/ or put spreads on either Dec., Jan. or Mar. expiration for the Yen and the Euro.
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