Financials: Dec. Bonds are currently 12 lower at 149’09 and the 10 Yr. Note 6 lower at 133’12.5. Bonds have been a bit choppy the last couple of sessions as the market absorbs the results of Spanish stress tests on their banking system. The good news: they do not need 100 billion Euro’s, the bad news: they probably need about 60 billion Euro’s. The next hurdle, I feel, will be continued talk internationally of underfunded pensions. The Fed will continue to purchase $40 billion of long term Bonds on a monthly basis in continuation of “Operation Twist” in an effort to stimulate job growth. Whether this continued “quantitative easing” with rates near historic lows will work remains to be seen. All that being said, treat Bonds as a trading affair between 148’10 and 151’00 from the long side on breaks.
Grains: Dec. Corn is currently 6’2 lower at 751’0, Nov. Beans 22’0 lower at 1538’2 and Dec. Wheat 12’0 lower at 872’2. On Friday we took profits from short put positions that were initiated last Thursday ahead of the Grain Stocks Report. As I am sure you are by now aware Corn closed up the 40 cent limit at 756’2 and have since established a level of resistance just above the 768’0 level. The market from here on out will be watching Crop yields and the value of the Dollar. At the moment support is in the 730’0 area, a level from which I will be a buyer. A close above the 770’0 level will technically indicate a rally to the 790-800’0 level. Nov. Beans are currently entering the 1520’0-1540’0 support level and have nearly completed my downside objectives with this mornings price action.
Cattle: Dec. LC are currently 22 lower at 125.90 and Nov. FC 32 higher at 145.95. As mentioned in last Friday’s “Report” I feel that the Dec. Cattle will find support in the 123.50 level and I will be buyer on breaks. If you went long on Friday’s sharp break after the Grain Report either take profits or use a protective sell stop in the 125.10 area. We have taken profits on the long Dec. Hog/ short Dec. Cattle spread.
Silver: Dec. Silver is currently 20 cents lower at 34.75 and Dec. Gold 6.00 dollars lower at 1777.50. We remain long Silver with an upside objective $36-37.00. I will be looking to be a buyer in Gold below the 1720.00 level if the market allows.
S&P's: Dec. S&P’s are currently 6.00 higher at 1443.00. Support is currently 1431.00 and resistance 1451.00. My bias is to the short side of the market on rallies. We are currently holding out of the money put spreads for both Oct. and Nov. expiration. Just as a side note: For the most part volatility has been low for the past few weeks and I feel that this will increase as we near the Nov. elections.
Currencies: As of this writing the Dec. Euro is trading 35 higher at 1.2931, the Swiss 23 higher at 1.0694, the Yen 17 lower at 1.2808 and the Pound 9 higher at 1.6136. I am currently on the sidelines. If the Euro should trade above the 1.3150 level in the next few days, I will once again be looking to the short side of the market.
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