Financials: Bonds are currently 23 higher at 124'30, the 10 Yr. Notes 19 higher, the 5 Yr. Notes 10 higher and the 2 Yr. Notes about 4 higher at 108'21.7. The December Eurodollars are 7 higher at 98.745. We remain short the 2 Yr. Notes and/or the 5 Yr. Notes. We are now also short the Dec. Eurodollars above the 98.710 level and will cover this position if the market trades below the 98.620 level. This morning the markets are experiencing a bit of a flight to quality (treasuries) as the equity markets are sharply lower due to number of occurrences such as the possibility of a pandemic of Swine Flu and the awaited results of the “stress tests” for TARP recipients.
Grains: On Friday Beans were 2 cents higher, Corn 4 lower and Wheat 3 higher. Over night Beans were 44 lower, Corn 14 lower and Wheat 13 lower. The Swine Flu epidemic is certainly the dominant fundamental affecting most commodity and financial markets this morning, the Grains being no exception. Returning strength in the Dollar has also contributed to this mornings slide. I must admit that the degree that this has affected the markets has taken me by surprise. We have been stopped out of our long July Corn position in the 373'0 area. We remain long out of the money calls and/or call spreads in July Corn. We remain long July Wheat with a protective sell stop at 521'0.
Cattle: On Friday Live Cattle were 70-90 lower with the June contract closing 87 lower at 82.60. As mentioned in past reports I am on the sidelines waiting to see how the market acts if the 82.00 level is tested basis the June contract. We may have that test today. To be honest, the market can go either way. Lower Corn prices by itself should be a friendly fundamental, but, throw in the possible ban on Pork product imports by countries reporting Swine Flu the possibility exists of fewer Beef imports by those countries. I expect this market to work lower. I am on the sidelines.
Silver: July Silver is currently 3 cents higher at 12.96. Over night the market traded as high as 13.41. The only explanation I can give for this is Swine Flu. It sounds a bit improbable to me that the market will be able to sustain higher prices on this alone. If you remain long either take profits or use a protective sell stop at 12.23. If the market trades above 13.10 once again during the session, I recommend raising your stop to the 12.45 level.
S&P's: June S&P's are currently 16.00 lower at 850.50. Again the most noted culprit for this morning's break is Swine Flu. I also think that the market is worried about proposals by G-7 and G-20 that more money is needed for stimulus packages. If you went short in the resistance area of 865.00-875.00 on Friday, either take profits or use a protective buy stop at 861.00 for protection. If the market trades below 844.00 lower your buy stop to the 855.00 level. Support is currently the 836.00 area.
Currencies: As of this writing the June Euro is 134 lower at 1.3109, the Swiss 75 lower, the Yen 37 higher and the Pound 66 lower at 1.4603. The June Dollar Index is currently trading 59 higher at 85.510. My recommended sell stop for remaining long positions in the June Euro at 1.3150 has been penetrated putting us on the sidelines for the moment. The same can be said for the Dollar Index. My recommended buy stop for remaining short positions at 85.32 was penetrated.