The Nemenoff Report Bonds Higher, S&P's Lower, Silver Lower

By Roger Baettig | September 17 2012 9:49 AM

Financials: Dec. Bonds are currently 10 higher at 145'08 and the 10 Yr. Notes 5 higher at 132'02. On last Thursday the Fed announced another round of "Quantitative Easing" with the proposed purchasing of up to 40 billion dollars woth of Mortgage Backed Securities on a monthly basis. The market reacted to this by breaking the Bond market from the 147'00 level to the low 144'00's because of the inflationary implications of such an action. In the face of this short term instruments rallied due to the Fed's talk that rates will now remain near historic lows until 2015. The Fed also announced the probable continuation of "Operation Twist". Prior to the FMOC meeting I was a buyer of Dec. Bonds on breaks just below the 147'00 level for short term trades and recommended the use of a close stop. Needless to say we took some small losses. For the near term support is currently 144'14 with resistance in the 146'28 area. For the moment I have a slightly friendly bias to these markets.

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Grains: Dec. Corn is currently 16'0 lower at 766'0, Nov. Beans 39'0 lower at 17'0 and Dec. Wheat 17'0 lower at 907'0. The Corn continues to remain weak as a result of last week's Grain Report. Beans, of which the Report was somewhat friendly have now sold off more than 60'0 from Friday's high and may be putting in a top (the contract high of 1789'0 was made on Sept. 4th, a week before the Report). I still feel that support for Dec. Corn remains in the 740'0 area, a level that the I will be looking to the long side of the market.

Cattle: On Friday Oct. LC closed 50 lower at 1.2705 and Oct. FC 40 lower at 1.4662. These markets have been trending slowly higher, but I must note that they diappointedly haven not really "popped" given the sell off in feed grain prices. We continued to hold the long Dec. Hog/short Dec. Cattle spread (Please note that we have reduced the size of this position and taken a partial loss) which has moved in our favor over the last few sessions.

Silver: Dec. Silver is currently 10 cents lower at 34.55 and Dec. Gold unchanged at 1773.00 These markets have rallied substantially since the FMOC meeting. We remain long Silver with an objective in the 36.00 area. Please note that I expect increased volatility in these markets on both the downside and the upside. That being said, I will be a buyer in Dec. Gold on a 50-70 dollar break in Gold from current levels. S&P's: Dec. S&P's are currently 3.00 lower at 1456.00. Given the recent dramatic rally in Equities and the current turmoil in the Middle East I once again have a short bias. I am willing to go short with a smaller position than usual and a bit more risk than per contract. My recommended protective buy stop is initially at the 1472.75 level.

Currencies: As of this writing the Dec. Euro is trading 36 higher at 1.3164, the Swiss 3 higher at 1.0804, the Yen 96 lower at 1.2686 and the Pound 25 higher 1.6241. I am now looking to try the short side of the Euro with a small position with a 100 point stop. Regards, Marc

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