S&P may be ready for pullback after positive earnings

Financials: Mar. Bonds are currently 6 higher at 146’07 and the 10-Year Note 3.5 higher at 132’12. The market awaits an interim approval for an extension of the debt ceiling through May 18. For the near-term I still want to look at the bonds as a trading affair. That being said, I am going to raise both support and resistance a bit, but maintain my overall negative bias. Support is now 144’24 and resistance 147’04. The 200-day moving average for a lead month contract remains at the 148’00 level. I mention this statistic as it is one of the indicators that is watched by fund managers as an indication of trend.

Grains: Mar. Corn is currently about steady at 728’6, Mar. Beans fractionally lower at 1451’0, Mar. Wheat unchanged at 779’2 and Dec. Wheat steady at 817’6. Continue to treat Mar. Corn as a trading affair between 712’0 and 740’0. As I have mentioned in the last few reports, you might consider buying a call spread in Dec. Wheat for a long-term trade. Currently the 900’0/950’0 call spread is trading for about 12’0 and the 900’0/1000’0 call spread is trading at about 21’0.

Cattle: Apr. LC is currently 10 lower at 130.375 and Mar. FC 12 lower at 146.875. As mentioned in the last few letters, producers who have on short futures positions as hedges, might consider buying out of the money calls and/or call spreads against their short futures to protect themselves from price advances. Speculatively speaking, these markets appear to be trying to make a bottom and I am looking at breaks as buying opportunities with protective sell stops 25-50 points below recent lows of 129.350 in Apr. LC and 144.425 in Mar. FC.

Silver: Mar. Silver is currently $0.16 higher at $32.35 and Feb. Gold about steady at $1,693.00. Tomorrow I will start quoting Apr. Gold as we are nearing first notice day for the Feb. contract.

S&Ps: Mar. S&Ps are currently 3.00 lower at 1486.50. Yesterday the market ran up late in the session after the release of positive earnings for Google, Apple, etc., resulting in a new contract high of 1490.50. My bias remains negative and I am lightly short (meaning I am positioning with fewer contracts than my usual unit. Support is currently 1468.00 and resistance at the overnight contract high of 1490.50.

Currencies: As of this writing the Mar. Euro is trading 16 higher at 1.3340, the Swiss 3 lower at 1.0765, the Yen 25 higher at 1.1298 and the Pound 40 higher at 1.5881. If you remain short the Euro either cover your position or continue to use a protective buy stop at 1.3365.

About the Author
Marc Nemenoff

Mr. Nemenoff is a 40-year veteran of the futures industry. While attending graduate school at the Illinois Institute of Technology, Marc took a job as a clerk on the trading floor of the Chicago Mercantile Exchange. Over the years he grew to become an independent member of the exchange and spent many years as a trader, market maker, lecturer, and committee member. Since 2004 Marc has been a senior broker and analyst handling customer accounts for both speculators and hedgers in addition to institutional traders. Marc is also the author of The Nemenoff Report, a daily overview of the markets that includes his own perspective on market direction. Mr. Nemenoff describes his approach to the market as 75% technical and 25% fundamental and is also a firm believer in the use of option strategies as a way of using leverage and minimizing risk when one has a long-term market strategy. You can contact Marc by phone at (888) 908-4310 or by email at mnemenoff@pricegroup.com. Learn even more on our website at www.pricegroup.com.

Futures and options trading involves substantial risk of loss and may not be suitable for everyone. The information presented by The PRICE Futures Group is from sources believed to be reliable and all information reported is subject to change without notice.

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