Financials: Sept. Bonds are currently 28 higher at 133'25. Slower than expected economic growth and a fear of deflation have pushed the market back to the weekly highs (a new recent high was made overnight at 134'01). I still feel that this market is overbought and that deflation fears are overblown. The lnog 10 Yr. Note/ short Bond spread is currently at 7'25, about 12 points above where we initiated this trade. My objective remains in the 6'20 area for the spread. Near term support is currently the
132'12 level and resistance the over night high of 134'01.
Grains: Yesterday Nov. Beans were 10 cents higher, Dec. Corn 7 higher and Dec. Wheat 12 lower. Over night Beans were 8 lower, Corn 2 lower and Wheat fractionally lower. Talk that the U.S. Wheat crop will provide ample supplies on a global basis has pressured Wheat over the couple of sessions, in spite of this Beans and Corn continue to rally. I feel that given the Russian crop problems we are headed for higher prices on Wheat. That being said, the volatilitry is keeps me away from this market. We remain long out of the money calls and/or call spreads in Dec. Corn. Support for Nov. Beans remains at 1020'0 and support for Dec. Corn remains at 416'0. I continue to recommend buying breaks to these levels.
Cattle: Yesterday Liuve Cattle closed slightly lower and Feeder Cattle moderately higher. We currently do not have a speculative postion in this market. The trend is definitiely up but I feel that further gains are limited by the cost of feed grain and possible consumer resistance.
Silver: Sept. Silver is currently 38 cents lower at 18.21. Yesterday the market closed above the 18.50 level for the firast time since June 30th. I will be a buyer below the 18.00 level if the market allows. We remain long the Dec. Silver 20/22 call spread.
S&P's: Sept. S&P's are currently 2.00 lower at 1087.00 after trading as high as 1093.00 earlier this morning. Resistance in the 1092.00 area continues to hold. Support remains in the 1070.00 area. I recommend the short side of the market on rallies for short term trades.
Currencies: As of this writing the Sept. Euro is 4 higher at 1.2884, the Swiss 34 higher at .9618, the Yen 43 higher at 1.1733 and the Pound 68 higher at 1.5637. At higher prices I still want to go long out of the money Dec. put spreads on both the Euro and the Pound. I am still monitoring the Dec. Yen 1.14/1.10 put spread and the outright 1.12 put for a buying opportunity as I feel the Yen is overbought.