Financials: Bonds are currently 28 higher at 119'19. The credit crisis in Europe appears to be spreading from Greece to Spain and Portugal. Many analysts feel that Greece will not be able to cope with the high interest rates combined with deflation and consequently rates are rising on their Bonds as the trade is questioning their ability to pay off the notes and roll their paper on the next round of refinancing. Today the market is once again seeing a flight to quality. The Dollar is also on new high ground for the year. We came in this morning spread long 10 Yr. Notes/short Bonds from the 1'02 level premium the Bonds. The spread is currently 1'13. I recommend taking the loss and standing aside.
Grains: Yesterday Beans were 12 cents lower, Corn 3 lower and Wheat about 2 lower. Over night Beans were 2 lower, Corn 3 lower and Wheat 4 lower. A strong Dollar will put pressure on most commodities this morning. We continue to hold out of the money call spreads in Nov. Beans. We also remain short the Sept. Corn 420'0/340'0 strangle. I will be interested in the long side of July Wheat below the 470'0 level if the market allows.
Cattle: Yesterday Live Cattle closed sharply higher with the Jun. contract closing 130 higher at 95.52. The market is now in resistance and looks attractive for a short sale above 95.50. Producers should consider selling out of the money calls once again and using the premium to partially offset the cost of price protective out of the money put positions. Feeder Cattle closed moderately higher gaining 55-80 points depending on the contact month. The Live and Feeder markets are currently trading slightly lower.
Silver: July Silver is currently 20 cents lower at 18.66. I will be a buyer below the 18.46 level.
S&P's: Jun. S&P's are currently 13.50 lower at 1185.25. Yesterday we were stopped out of remaining short positions when the market traded above the 1196.00 level. I continue to feel that this market is headed lower. At the moment I recommend entering the market from the short side using a sell stop at 1175.00 which is just below the recent low of 1176.75 made on 4/28/2010.
Currencies: As of this writing the Jun. Euro is trading on new yearly lows at 1.3068, down 146 points. The Swiss is 101 lower at .9125, the Yen 9 higher at 1.0585 and the Pound 103 lower at 1.5152. The Dollar Index is on a new yearly high, up 76 at 83.16. I feel the Euro is headed lower and going to take the cautious route in establishing a position as this market is certainly vulnerable to upside corrections given the break this year from highs in the low 1.50's seen just last December. I recommend using put spreads on either the Jun. or Sept. contracts.