Bonds take a breather after reacting to jobs report

Financials: June Bonds are currently 10 higher at 141’08 and the 10 Yr. Note 5.5 higher at 131’21.0. Since my last letter on March 7, we have seen a Monthly Employment Report that showed an increase in non-farm payrolls of 236,000 vs. expectations of 170-180,000, which has since seen the Bonds drop from the March 7 level of 142’15 to the March 8 low of 140’14. On last Thursday we took profits ahead of the Employment Report on long 10-year Note/short Bond and long 5-Year Note/short 10-Year Note spreads. I now recommend taking profits on any long put option and/or long put spreads. I am now willing to look at the Bonds as a trading affair between the 140’20 and 142’26 levels. My bias has changed from negative to neutral.

Grains: May Corn is currently 1’0 higher at 712’2, May Beans 7’6 lower at 1472’0, May Wheat 0’6 lower at 699’2 and Dec. Wheat 1’4 lower at 720’0. We remain long out-of-the-money call spreads in Dec. Wheat. Last Friday’s Supply/ Demand Report showed Corn supplies somewhat tighter than expected and Beans and Wheat slightly more than expected. The result has been a 20 cent rally in Corn and little price movement in Beans and Wheat. I am currently on the sidelines having missed a buying opportunity in Corn.

Cattle: Apr. Live Cattle are currently 15 higher at 128.27 and Apr. Feeder Cattle 7 lower at 141.30. Both Live and Feeder markets made new recent lows yesterday as the market has been reacting to both sluggish demand and higher feed grain prices. That being said, my bias remains negative but given the recent declines I expect a short covering rally and bottom picking and recommend covering any speculative short positions and standing aside.

Silver: May Silver is currently $0.40 higher at $29.27 and Apr. Gold is %14.00 higher at $1,592.00. We remain long a small position in Silver. Apr. Gold has broken out to the upside of its recent range of the mid $1,560s to the mid-$1,580s. A close above $1,597.00 could signal a trend change to the upside in Gold. I will stand aside and await any technical developments.

S&Ps: June S&Ps are currently 2.00 lower at 1448.50. This market continues to defy gravity. Treat as a trading market between 1538.00 and 1557.00.

Currencies: As of this writing The Mar. Euro is currently unchanged at 1.3042, the Swiss 13 higher at 1.0567, the Yen 26 higher at 1.0415 and the Pound 41 lower at 1.4889. The bias is beginning to turn neutral from negative at the moment as I feel these markets are oversold.

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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