Financials: Sept. Bonds are currently 1'01 lower at 139'04 and the 10 Yr. Note 10 lower at 130'09. This is the first time that we are seeing a bit of a chink in the armor in Bonds for about two weeks as evidenced by the nearly full point loss in the spread between the 30 Yr. Bond and the 10 Yr. Note. As mentioned in the last few reports I am advocating the purchase of puts in the Bonds and/or 10 Yr. Notes for expiration in either Oct. or Dec. I am looking at strike prices of 134'00 or lower for the Bonds and 128'00 or lower for the 10 Yr. Note. I am still a bit apprehensive of using futures for anything but short term trades at this point in time.
Grains: Yesterday Nov. Beans closed 16 higher, Dec. Corn 9 higher and Dec. Wheat 4 higher. Over night Beans were 9 higher, Corn 4 higher and Wheat 8 higher. The market is now looking at the last grain production estimate of 153 bushels of Corn per acre as optimistic and some analysts are now estimating yields of 151 or lower. We remain long calls and/or call spreads in Dec. Corn. That being said, this has been a pretty good run to the upside and I recommend taking partial profits by either liquidating a portion of your positions (if you have multiple contracts) or rolling long call positions into higher strike prices.
Cattle: Yesterday Oct. Live Cattle closed 20 higher at 115.70 and Oct. Feeder Cattle 47 higher at 134.57. If you remain short either take profits or lower your protective buy stops to 116.40 in Oct. LC and 135.35 in Oct. FC.
Silver: Sept. Silver is currently 27 cents lower at 43.06, well off the overnight high of 44.27 (a new recent high). We continue to hold a small long position of which I recommend using protective sell stops to protect long term profits. Dec. Gold is currently 12.00 lower at 1875, well off the overnight high of 1917.90. I caution against being long this market which I believe shows symptoms of being grossly overbought.
S&P's: Sept. S&P's are currently 7.00 higher at 1130.00. Support remains at 1117.50 and resistance 1153.00. I prefer the long side of the markets on breaks at this time.
Currencies: As of this writing the Sept. Euro is currently 75 higher at 1.4442, the Swiss 34 higher at 1.2707, the Yen 34 higher at 1.3068 and the Pound 2 higher at 1.6482. I am on the sidelines.
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