Bonds rise after disappointing Chinese PMI

Financials: June Bonds are currently 14 higher at 148’19 and the 10 Yr. Notes 6 higher at 133’09.0. A halfhearted endorsement of “quantitative easing” by the G-20 over the weekend concerning recent activity by the Japanese could lead to similar actions by other European countries. Overnight the Chinese PMI was a bit disappointing but this may have been trumped by some better than expected economic numbers coming out of France and Spain, which took the market off of its early morning high of 149’06. Technically the market has held my stated resistance of 149’05 (see “Report” of 4/19/2013) area. Support is currently the 147’22 area. If the 149’05 area does not hold the market down the next major resistance level is currently the 151’00 area. Treat as a trading affair.

Grains: July Corn is currently 4’0 at 619’4, July Beans 1’6 lower at 1362’4 and July Wheat 8’2 lower at 694’2. July Corn is nearing the April 5th low of 615’0, should this level be penetrated I would expect a break to the 605’0-612’0 level where I will be willing to try the long side of the market. We remain long out of the money call spreads in Dec. Wheat. At some point in time (a month from now) I will be looking to cover the short end of these spreads as the 1000’0 call should be below 3’0.

Cattle: June LC are currently 37 higher at 121.20 and May FC 100 higher at 139.60. Friday’s Cattle on Feed Report showed the following: On feed 95% of a year ago vs. average expectations of 93.9%. Placed in March 106% vs. average expectations of 99.1%. Marketed in March 92% vs 93.5%. All figures were somewhat negative compared with expectations but given recent declines in the market the bearishness in this report was a given. In fact the placement number may be somewhat constructive down the road as this may showing willingness to place cattle and show renewed demand for Feeders. I’m interested in the long side of the market on sharp breaks.

Silver: May Silver is currently $0.51 lower at $22.82 and June Gold is $5.00 lower at $1,416.00. Trends remain down. Continue to treat gold as a trading affair between 1360.00 and 1430.00. Personally I prefer the short side of the market on rallies to resistance with close protective buy stops.

S&Ps: June S&Ps are currently 5.50 higher at 1561.50. We continue to hold the combination of short futures and short the June 1520 put. Support is currently 1546.00 and resistance 1564.00(this morning’s high is 1564.25).

Currencies: As of this writing the June Euro is trading 60 lower at 1.3004, the Swiss 62 lower at 1.0643, the Yen 27 higher at 1.0090 and the Pound 24 lower at 1.5250. The June Dollar Index is currently 26 lower at 83.08. Support on the Euro is currently the 1.2915 area and resistance 1.3200. If support holds over the next few sessions we may be looking at short term bottoming action. I will be willing to once again try the short side of the June Dollar Index on a rally above the 83.30 level with an initial stop in the 84.25 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.

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