Financials: Dec. Bonds are currently 11 lower at 132'27. The long 10 Yr. Note/ short Bond spread is currently at 8'06 premium the Bonds on the Dec. contract. A liitle history on this trade: We are currently losing about $1000 since we originally put this spread on a few weeks ago in Sept. contract and then rolling it into Dec. This mornings weekly report on Initial Unemployment Claims showed a decline of 7,000 versus a pre-report estimate of down 3,000. This is not exactly good news for the economy but better than expected. Near term support for Dec.
Bonds is currently 132'08 and resistance 134'06. I still feel, without sounding like a broken record, that we will someday look back on these time with
disbelief that the interest rate on the 30 Yr. Bond actually fell below 3.5%. That being said, I go back to an old market adage Do you want to be right or do you want to make money?. Treat as a sideways market between support and resistance. Later this morning: Factory orders and pending home sales. Tomorrow we will have the Monthly Employment Report.
Grains: Yesterday Beans were 4 lower, Corn 7 higher and Wheat 23 cents higher. Over night Beans were 2 higher, Corn fractionally lower and Wheat 6 higher. I am still concerned that Nov. Beans have not been able to hold above the 1020'0 level and I recommend the sidelines at the moment. I still feel that Dec. Corn is headed higher, but, recommend taking partial profits if you are holding multiple contracts. If you are long Dec. Corn futures either take profits or raise your protective sell stop to the 436'0 level. We remain long call spreads in Dec. Corn.
Cattle: Yesterday Live Cattle closed 40-5- higher and Feeder Cattle 20 -40 lower depending on the contract month. The higher cost of feed grains continue to dominate the
Feeder market. That being said I am looking for the market, both feeders and live cattle to start finding support 100-125 points lower.
Silver: Dec. Silver is currently 24 cents higher at 19.63. If the market can hold these levels, my next objective will be the 20.15 area. If you remain long futures either take profits or raise your protective sell stop to the 18.70 level. We remain long the Dec. 20/22 call spread. If Dec. silver should trade above the 20.25 level, consider rolling the Dec. 20 call up to the 20.25 or 20.50 strike price in an effort to take some cash out of the market and lower your cost of being in the spread.
S&P's: Sept. S&P's are currently 1.00 higher at 1083.00. Yesterday the market rallied through the 1067.00 resistance level to what is now near term resistance in the low 1080's. Longer term resistance will come into play in the 1097.00 area. Near term support is currently the 1064.00 level. This mornings favorable Jobless Claims Report has put some underlying support in the market. The true story will be told with tomorrows Monthly Employment Report. Treat as a trading market. My bias for the moment is to the long side of the market.
Currencies: As of this writing the Sept. Euro is 13 higher at 1.2809, the Swiss 43 higher at .9884, the Yen 23 higher at 1.1862 and the Pound 78 lower at 1.5363. We remain long the Dec. Yen 1.12 put. Of note: there was quite a bit of interest in puts in the Yen yesterday with the 1.12 put nearly doubling it's open interest going from about 900 to about 1600 contracts. It seems to me that there will be an intervention against the Yen in favor of the Dollar at sometime in the future.