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

By Roger Baettig | September 06 2012 10:10 AM

Financials: Dec. Bonds are currently 27 lower at 150'00. As expected the ECB has left rates unchanged. This morning ECB President Mario Draghi announced that the ECB will be purchasing Bonds with up to a 3 year maturity in an effort to keep rates from troubled economies such as Greece and Spain from getting out of hand. Basically he will do whatever it takes to preserve the Euro while recognizing the systemic problems and the continued possibility of recession and deflation. The ADP Private Sector Jobs Report showed an If you went short above the 151'00 level (see Report dated 8/28/2012), either take profits or use a close stop.

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Grains: Dec. Corn is currently 3'0 higher at 793'4, Nov. Beans 5'0 lower at 1742'4 and Dec. Wheat 9'0 higher at 877'0. Yesterday the Dec. Corn came close to testing the 785'0 support level with a low of 788'0 as export news is somewhat disappointing and the market is percieving that yields might be slightly better than current estimates. Users of Corn such as livestock feeders should be looking to cover short term needs at present levels. We continue to hold the combination of short the Dec. Corn 680'0 put and short the Dec. Corn 900'0 call originally executed at about 32'0. This strangle is currently at 20'0. I will be looking for profit taking opportunities below 18'0.

Cattle: Oct. LC are currently slightly lower at 126.25 and Oct. FC slightly higher at 147.17. We continue to hold the long Dec. Hog/ short Dec. Cattle spread which is currently 200 points against us.

Silver: Dec. Silver is currently 40 cents higher at 32.73 and Dec. Gold 11.00 dollars higher at 1705.00. We remain long Silver. Near term resistance is currently the 33.25 level with long term resistance above the 36.00 level. I suspect that volatility will increase and the market could be subject to sharp breaks. If you remain long Gold I recommend taking profits.

S&P's: Dec. S&P's are currently 13.00 higher at 1416.50. Positive jobs reports and the perception that the ECB will take action to curb rates in member countries at risk has taken the market higher this morning penetrating the 1414.00 resistance level. Support is now 1406.00 with resistance just above the 1420.00 level. I am on the sidelines until after tomorrow mornings Monthly Unemployment Report.

Currencies: As of the writing the Sept. Euro is trading 35 lower at 1.2566, the Swiss 44 lower at 1.0422, the Yen 87 lower at 1.2688 and the Pound 18 lower at 1.5866. We have been basically on the sidelines watching the Euro gyrate between the 1.2400 and 1.2600 level over the last month of so. As mentioned over the last few weeks I will be looking to once again being on the short side of the Euro above the 1.2700 level if the market allows.

Regards, Marc

888.908.4310 | 312.264.4310 mnemenoff@pricegroup.com