Sept. Bonds are currently 1’00 lower at 116’21.0, the 10 Yr. Notes 18 lower, the 5 Yr. Notes 6 lower and the 2 Yr. Notes 2 lower. Dec. Eurodollars are 5 lower at 99.01. We remain short Sept. 2 Yr. Notes and Dec. Eurodollars. As mentioned Thursday we were looking for a bounce in the Bonds as well as other interest rate related futures. Friday we had that bounce as the Bonds proved to be oversold by rallying nearly 2’00 full points. Resistance has now been established in the 117’20-118’00 area for the Sept. contract. I recommend trading from the short side of the market on a rally above 117’15 for Sept. Bonds. Support is currently 115’26.0.
June S&P’s are currently 14.00 higher at 932.00. News of the imminent bankruptcy of G.M. has apparently buoyed the market as investors feel maybe the worst is over. As I mentioned a while back, the market may need sustained inflation and a weak dollar to hold onto any rallies. Well. We certainly have had a weak dollar, as for inflation, the commodity markets have risen, but nowhere near last year’s high levels. As an example: Crude Oil is at 67.00, far below 2008’s high of 150.00. I do believe that the bottom is in, but I am not sure of the upside potential from current level. I am willing to try the short side of the market for5 a short term trade at current level with a protective buy stop at 946.00. Near term support is currently 908.00 with long term support at 886.00. I will be a buyer for establishing a long position on a break below 896.00.