Bonds rise as China shows signs of slowing

Financials: June Bonds are currently 9 higher at 147’26 and the 10 Yr. Notes 2.5 higher at 133’02.0. Since my last letter (Thursday) we were stopped out of any remaining short positions when the market traded through the 146’14 level on the upside. Given the retracement to the 148’00 area I am hesitant to enter this market from either the long or short side at this time. Of note: Cyprus is once again in the news needing more money and it has been rumored that there may be Gold reserve selling to generate cash. China shows signs of a slowing economy. The Fed in their FOMC minutes suggested the possibility that quantitative easing may end a bit sooner than expected. Given the possibility that the printing presses for dollars may soon slow I would normally be bearish Bonds. That being said, I am going to give due respect to the market action and stand aside for a day or two.

Grains: May Corn is currently 9’0 lower at 649’4, May Beans 8’6 lower at 1404’2 and May Wheat 15’4 at 699’2. Grains are down in sympathy with most other commodities this morning (metals, energies, equities and softs). I will be interested in going long on a 25’0 break in Corn from present levels.

Cattle: June LC closed 10 higher at 120.75 and May FC continues its slide closing 102 lower at 147.80 on Friday. This morning there is yet a definitive call and could open on either side of Friday’s settlement. I will be a buyer in June LC below the 118.50 level if the market allows.

Silver: May Silver is currently $1.95 lower at $24.35 with an overnight low of $22.94. We continue to hold a small long position the equivalent of 5.0% of an overall investment portfolio. As I’m sure many of you are willing to point out to me Silver is down sharply over the last few weeks and this position is at a loss. Keep your metals position small. Gold is currently $90.00 lower at $1,410.00 with an overnight low of $1,385.00. I have avoided the long side of this market for some time now and will now be willing to go long a small position below the $1,400.00 level with stops below $1,385.00. Many pundits are now noting that Gold has entered bearish territory given their definition of a bear market beginning with a 20% drop off the highs. I want to be a buyer when they are selling.

S&Ps: June S&Ps are currently 6.25 lower at 1575.75. We continue to hold a combination of short futures and short the June 1520 put.

Currencies: As of this writing the June Euro is trading 16 higher at 1.3101, the Swiss 25 higher at 1.0788, the Yen 92 higher at 1.0210 and the Pound 11 lower at 1.5327. With the G20 meeting coming, Japan has been asked not to continue devaluing their currency for the moment. The June Dollar Index is currently 13 lower at 82.29. If you remain short the Dollar Index either take profits or lower your protective buy stop to the 82.60 area.

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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