Financials: Dec. Bonds are currently 20 lower at 143'12 and the 10 Yr. Note 10 lower at 130'13. Yesterday we liquidated the long 5 Yr. Note/ short 10 Yr. Note spread for a profit (about 18 points, $500+). We have also rolled all out of the money puts to lower strike prices. The market rallied substantially off its early lows as the market figured out it is more about the strength and weakness of the Dollar than interest rates. The market once again went into risk off mode and sought the safety (?) of U.S. Treasuries. Being someone who is always looking for the kink in conventional wisdom I am once again looking for a play on the short side of the market in the next few days. Keep in mind that Friday morning we will have the monthly Unemployment Report. Starting tomorrow I will be quoting March contracts.

Grains: Yesterday Jan. Beans closed 14 cents higher, Mar. Corn 8 higher and Mar. Wheat 4 higher. Over night Beans were 4 higher, Corn fractionally higher and Wheat 4 higher. We remain long Mar. Corn with a protective sell stop at 586'0.

Cattle: Yesterday Feb. LC closed 25 higher at 122.55 and Jan. FC 10 higher at 144.72. I still have a negative bias to these markets and recommend a combination of short futures and short out of the money puts. Short hedgers in Feeder Cattle should take note of recent price advances and start hedging contracts through Sept. 2012

Silver: Dec. Silver is currently 40 cents lower at 31.76. If you remain long term bullish, I recommend ONLY using out of the money call options/ option spreads at this time. Starting tomorrow I will be quoting the March 2012 contract.

S&P's: Dec. S&P's are currently 2.00 higher at 1193.00. The market over the last two sessions has reacted in a positive manner to Holiday retail sales and a rumored impending Italian bailout. Over night the market traded as high as 1206.00 establishing near term Resistance above the 1203.00 level. Support is currently 1177.00. Treat as a trading market between support and resistance. I prefer the short side on rallies.

Currencies: As of this writing the Dec. Euro is trading 23 higher at 1.3326, the Swiss 16 higher at 1.0848, the Yen17 higher at 1.2844 and the Pound 111 higher at 1.5601. Yesterday we covered short futures positions in the yen. I recommend rolling all Yen put positions for Jan. or Mar. to a lower strike price in effort to take advantage of the recent price decline. If you continue to hold out of the money puts and/or put spreads in the Euro, I recommend staying with the position.

Regards,

Marc
888.908.4310 | 312.264.4310
mnemenoff@pricegroup.com