Financials: Mar. Bonds are currently 24 lower at 120'07. I am still looking at this market as a trading affair between 119'18 and 122'08. Personally I prefer the short side of the market on rallies above the 121'28 level. We remain long out of the money puts and/or put spreads in the June and Sept. 2012 Eurodollars.
Grains: Yesterday Mar. Beans closed 23 cents lower, Corn unchanged and Wheat 7b lower. Over night Beans were 14 higher, Corn 5 higher and Wheat 13 higher. This morning's Crop Report is once again looked at as bullish as the USDA once again lowered its estimate of the Corn harvest to 12.44 billion bushels from last months estimate of 12.54. Soybeans estimates were lowered to 3.329 billion bushels from last months estimate of 3.375. The early call is 10-20 cents higher in Corn and 20-40 cents higher in Beans. We remain short the Mar. Beans 1300'0 strangle which closed at 114'0 yesterday, giving us about a 20 cent profit from the time we initiated this trade. I expect the strangle to trade up (give back) about 10 cents early in the session
Cattle: Yesterday Live and Feeder Cattle closed sharply higher at or near record high prices. In spite of the strong technicals I remain on the sidelines. A strong cash market and detrimental weather conditions continue to fuel rallies. This morning's Crop Report which should indicate higher feed grain prices should add to the upward momentum of deferred
contracts as the prospect of higher costs could cause further trimming of herds. The question for me being, is at what point will the higher prices start hurting consumer and export demand?
Silver: Mar. Silver is currently 9 cents higher at 29.58. We remain long out of the money call spreads on the Mar. contract. I will be a buyer of futures in the 27.50 area if the market allows.
S&P's: Mar. S&P's are currently 6.50 higher at 1278.00. I feel that the market is currently in long term resistance in the 1274.00-1279.00 area and prefer to trade from the short side of the market. Support remains at 1256.00.
Currencies: As of this writing the Mar. Euro is trading 68 higher at 1.3035, the Swiss 26 higher at 1.0303, the Yen 20 lower at 1.2000 and the Pound 74 higher at 1.5668. If you remain short the Euro either take profits or continue to use a protective buy stop in the 1.3080 area. If you remain short the Swiss either take profits or lower your buy stop to the 1.0440 area. If you are short multiple contracts of either of these currencies, take partial profits.
Senior Market Analyst, Price Futures Group
Publisher, Nemenoff Letter
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