Financials: Dec. Bonds are currently 18 higher at 147’14 and the 10 Yr. Notes 6.5 higher at 132’28. Once again Europe is in the news as the market shows concern over European debt seeking the “safety “ of U.S. Treasuries in “risk off” trade. Since last Thurs. the market has traded above last weeks resistance of 146’28 and looks poised to trade higher. For the moment support has moved up to the 145’20 area from last weeks 144’14 level. Resistance for the moment is the 148’14 level for the near term. Longer term resistance, if near term resistance is penetrated, will be the 151’00-152’00 area. My bias at the moment is to be a buyer on breaks using a protective sell stop about 15 ticks below support.
Grains: Dec. Corn is currently 1’2 lower at 747’0, Nov. Beans 14’0 lower at 1608’0 and Dec. Wheat 3’6 lower at 893’4. As I recommended last week, for the moment I am only interested in short term trades in Dec. Corn from the long side on breaks to just below the 740’0 level with protective sell stops of about 5 cents from your entry level. Over the coming weeks Harvest news, particularly for Corn, will be trickling in and the market will be gyrating in a somewhat narrow band until there is updated news on Crop Yields and export demand which has been somewhat soft. Of note: Beans may be making a head and shoulders top.
Cattle: Live and Feeder Cattle are currently called higher based on Friday’s Cattle on Feed Report which showd the following:
On Feed 99% of a year ago vs. average expectations of 99.9%
Placed in Aug. 89% of a year ago vs. average expectations 92.7%
Marketed in Aug. 95% vs. average expectations of 98.5%.
The placement number should be considered friendly for the Feb. and Apr. contracts and ultimately keep these contracts well above the 130.00 level. The marketing figure which was below expectations could work against the nearby contracts and should be somewhat negative for nearby/ deffered contract spreads. For those of you still in the long Dec. Hog/ short Dec. Cattle spreads, take profits.
Silver: Dec. Silver is currently 70 cents lower at 33.95 and Dec. Gold 14.00 lower at 1764.00. We remain long Silver. Currently we are on the sidelines in Gold and will look to be a buyer on a break to the 1720.00 area.
S&P's: Dec. S&P’s are currently 5.00 lower at 1447.00 Renewed concerns over European debt is pressuring the market this morning. As mentioned last week my bias is to the short side of the market and I am a seller on rallies and a buyer of cheap out of the money puts for Oct. expiration. A close below the 1443.00 level will generate a near term sell signal, signaling a break to the 1432.00 area. For the moment resistance is in the 1458.00 area.
Currencies: As of this writing the Dec. Euro is trading 81 lower at 129.20, the Swiss 65 lower at at 1.0675, the Yen 18 higherat 1.2824 and the Pound 57 lower at 1.6184. Last week we were sellers in the Euro above the 1.3100 level. If you remain short either take profits or lower your protective buy stop to the 1.2960 level.
Regards, Marc
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