For the Trading day of Tuesday, October 27, 2009
Financials: Dec. Bonds are currently unchanged at 118'02. We continue to hold the combination of short Dec. Bonds and short the Dec. Bond 116'00 put. Near term support of 118'12-118'20 has been penetrated and I am now looking at the 117'18 level as the next area of support. For those of you who are getting worn out by this position, take profits. Just to give you a little history on this position. We originally sold the Bonds in the 119'00 area and sold the 116'00 put at about 1'20. We subsequently covered the 116'00 put at 15 points and then resold it in the 53-1'03 area.
Grains: Yesterday Beans were 19 lower, Corn 19 lower and Wheat 20 lower. Over night Beans were fractionally higher, Corn 1 lower and Wheat 3 lower. Continued profit taking, harvest pressure and a slight recovery in the Dollar have all added pressure to the grains in the last two sessions. I remain on the sidelines and prefer to wait and see if there is more downside in this market before recommending to once again going long calls and/or call spreads.
Cattle: Yesterday Dec. Cattle closed 25 lower at 87.15. The long Dec. /short Apr. spread closed about unchanged at 210 premium the Apr. However, this spread did give a profit taking opportunity below 200 points premium the Apr., actually trading below the 190 level for a short period of time mid session. We are now on the sidelines.
Silver: Dec. Silver is currently 2 cents lower at 17.07. Yesterday the market closed nearly 60 cents lower as the Dollar strengthened and commodity prices broke in just about all sectors. I continue to recommend taking profits on all long futures positions and going long out of the money call spreads about 6 months out to continue to participate in this market from the long side.
S&P's: Dec. S&P's are currently 1.00 higher at 1067.50. Yesterday the market broke on some negative housing news and speculation that the language in the next FOMC meeting will indicate the possibility of the Fed tightening sometime down the road. We remain short futures and/or out of the money puts as both portfolio insurance and a speculative position.
Currencies: As of this writing the Dec. Euro is 19 higher at 1.4876, the Swiss 11 higher at .9827, the Pound 82 higher at 1.6381 and the Yen 26 higher at 1.0870. We remain long out of the money puts in the Yen and long out of the money put spreads in the Pound. As of this writing the Dec. Dollar Index is 14 lower at 76.060.