Financials: Bonds are currently 23 lower at 116'09, the 10 Yr. Notes 18 lower at 116'23, the 5 Yr. Notes 11 lower at 115'01 and the 2 Yr. Notes 3 lower at 108'06. The Dec. Eurodollars are unchanged at 99.29. We remain short the Dec. Eurodollars from the low to mid 98.90's. Last week I was recommending trading the Bonds from the long side on breaks. All of my near term upside objectives have been met and my bias is now towards the short side of the market. Near term support for Sept. Bonds is currently 116'20 and resistance 119'00. I feel that in light of the current action in equities and commodities such as the metals, energy and grains, inflationary pressure should start to come into play. I am a seller on rallies. If the Bonds are too volatile for your style of trading, consider the 10 Yr. and 5 Yr. Notes as a trading vehicle.
Grains: On Friday Nov. Beans were 11 cents higher, Dec. Corn 7 higher and Dec. Wheat 12 higher. Over night Beans were 40+ higher, Corn 11 higher and Wheat 7 higher. We are currently long the Dec. Corn 360 call which will be in the money if the market holds the overnight gains. I suggest either one of two strategies for this position. Either roll your position into a higher strike price to take some money off the table or sell a further out of the money call such as the Dec. 400'0 or higher to take advantage of the recent run up in price and to limit exposure.
Cattle: On Friday Live Cattle closed 12-35 higher after being under pressure most of the session. If you remain long continue to use a protective sell stop on the Aug. contract at 83.60 and the Oct. contract at 88.75. Bear in mind that Aug. is approaching first notice day for delivery, if this is a concern, roll your position into Oct. If the market should trade as much as 100 higher today raise your stop by 50 points.
Silver: Sept. Silver is currently 47 higher at 14.41. If you remain long from below the 13.80 level, either take the short term profit or use a protective sell stop at 13.35.
S&P's: Sept. S&P's are currently 9.50 higher at 994.00. We have once again been stopped out of a recent short term position with a $500-$700 loss. I guess I am out of touch with the market. I keep asking my self what has changed in the last month other than market psychology. I feel this market is overbought and will remain on the sidelines.
Currencies: As of this writing the Sept. Euro is 68 higher at 1.4322, the Swiss 24 higher at 93.86, the Yen 30 lower at 1.0523 and the Pound 160 higher at 1.6847. I continue to recommend being long out of money puts and/or put spreads. My downside objective for the Yen is the 1.0300 level for the near term. I also like the short side of the Pound now that it is firmly above the 1.6600 level. The Sept. Dollar Index is 39 lower at 78.06. The Dollar should be finding some near term support.