Financials: Dec. Bonds are currently 20 lower at 144'03 and the 10 Yr. Notes 11 lower at 130'20. We currently have no positions in these markets other than some out of the money puts in Jun, Sept. and Dec. Eurodollars. That being said, I now feel a bit more comfortable with pursuing the short side of the Bonds now that they have backed off of their highs above the 147'00 level establishing a level of resistance. For those willing to assume the risk, I recommend selling the Bonds or the 10 Yr. Notes if the Bonds trade above 145'06 with a buy stop above 147'14 in the Bonds and 132'16 in the 10 Yr. Notes. You also might consider the long Bonds/ short 10 Yr. Note spread above the 13'20 level.
Grains: On Friday Nov. Beans closed 25 cents lower at 1258'0, Dec. corn 11'4 lower at 638'4 and Dec. Wheat 11 lower at 652'0. Over night Beans were 8 cents lower, Corn 5 higher and Wheat 4 higher. I remain on the sidelines holding out of the money calls and/or call spreads in Dec. Corn.
Cattle: On Friday Dec. LC closed 87 higher at 116.725 and Nov. FC closed 20 lower at 136.575. Friday Cattle on Feed Report showed the following: On Feed 105% of a year ago versus expectations of 107.9%. Placements 99% vs. average expectations of 107.7%. Marketed 107% vs. 105.7. I would consider all of this figures friendly and expect Live Cattle to open at least 50 higher and gain on the Feeder Cattle. I am currently on the sidelines. Should Dec. Cattle eventually trade above 122.00 I will be looking at the short side of the market. Below 114.00 I will be a buyer.
Silver: Dec. Silver is currently 1.50 lower at 28.63 after making an overnight low for 26.15. As mentioned Friday we are holding a small long position. I must note that this is biggest break I've seen on Silver and Gold since 1979. I'm inclined to hold a small position in Silver (about 6-8% of your overall porfolio) and wait until the market trades above 32.00 before liquidating. Dec. Gold is currently 14.00 lower at 1625.00. The overnight low was 1535.00. I would now consider 1550.00 support, where like Silver, you might consider a small long position.
S&P's: Dec. S&P's are currently 6.00 higher at 1136.00. Long term, support is in the 1070-1080 area. I will be a buyer below the 1090.00 level. Near term support is currently 1126.00 with resistance at 1146.00. I am un the sidelines at the moment.
Currencies: As of this writing the Dec. Euro is 7 higher at 1.3463, the Swiss14 higher at 1.1061, the Yen 64 higher at 1.3113 and the Pound 102 higher at 1.5514. I am on the sidelines.
Please note: I will be out of town the end of this week until Tues. Oct. 4th.
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