Financials: Sept. Bonds are currently 1'01 higher at 133'01. Slower quarterly growth in Japan has put upward pressure on Bonds in our markets. The long 10 Yr. Note/ short Bond spread is currently trading at 7'03 premium the Bonds. I must admit that this spread currently looks very attractive for a short term trade (1-5 days) and I am going to put this spread on at the market and look for a 15 point profit over the next day or so. If you went short the Bonds over the last couple of days, I would use a buy stop 10 points above the overnight high of 133'10. The yield on the 30 Yr. Bond is now under 4% and the yield on the 10 Yr. Note below the 2.75% level.
Grains: On Friday Nov. Beans closed 15 cents higher at 1044'0, Dec. Corn 5'4 higher at 427'2 and Dec. Wheat 9'4 lower at 734'2. Over night Beans were 4 cents lower, Corn fractionally higher and Wheat fractionally lower. We remain long calls and/or call spreads in Dec. Corn. If the market rallies another 10 cents in Dec. Corn I will be looking to take some profits by taking one ofr the following actions: Rolling positions to higher strike prices. Selling calls at a higher strike than existing naked calls resulting in a call spread. Just out right taking profits. I also remain friendly Nov. Beans and continue to recommend trading the Beans from the long side on sharp breaks.
Cattle: On Friday Live cattle closed slightly lower and Feeder Cattle 30-80 lower depending on the contract month. Hedgers in Feeder Cattle who are short futures should consider covering a portion of their positions and purchasing out of the money puts for continued price insurance. Hedgers in Feeder Cattle who are long puts that are now in the money by 2 or more cents should consider rolling their positions into a lower strike price. Producers who are hedgers in Live Cattle should be looking at hedging opportunies for Oct. and Dec. contracts.
Silver: Sept. Silver is currently 28 cents higher at 18.39. Once aain this market is making an attempt at testing the 18.50 level on a close basis. We remain long the Dec. 20/22 call spread. As has been the case for the last month or so, I am waiting for a close above the 18.50 level before entering the futures market.
S&P's: Sept. S&P's are currently 3.00 lower at 1073.50. Slower growth indicating in Japan has put some pressure on U.S. markets this morning. Over night the market tested support in the 1070.00 area (the low was 1068.50). I feel that overall this market is headed lower and will be looking to trade from the short side above the 1086.00 level. If the market takes out the overnight low I would place the next elvel of support in the 1055.00-1060.00 level.
Currencies: As of this writing the Sept. Euro is 97 higher at 1.2850, the Swiss 152 higher at .9646, the Yen 120 higher at 1.1720 and the Pound 71 higher at 1.5660. I remain on the sidelines at the moment awaiting higher prices in the Pound and the Euro as an opportunity to purchase out of the money puts and/or put spreads. To be honest I am impressed by the strength in the Yen, but my gut instinct says it is getting overdone.