Bonds find support after positive Italian auction

Financials: June Bonds are currently 4 higher at 149’00 and the 10-year Notes 3 higher at 133’17.0. Positive results for an Italian 10-year auction putting rates at a recent low of 3.5% have added a bit of upward pressure on Treasury prices. Of note is that last week’s high of 149’06 (the overnight high was 149’05) has not been breached. Near term support remains at 147’22 and resistance the 149’05 area. If resistance does not hold the next level will be the 151’00 level. I am currently on the sidelines and concerned that something is awry. With equities pushing at five-year highs and gold about 20-25% off of highs made nearly two years ago, I feel that under normal circumstances Bonds should be retreating. Please note that I have said “under normal circumstances,” given “Quantitative Easing” and the sequester to use a phrase I have often used “I fear we are rearranging deck chairs on the Titanic.” I am currently on the sidelines in fear of fading the Fed. As I have said these markets are not acting normally and I do feel at some point something has got to give. Scenario one will be Bonds hold or rally and equities break. Scenario two, equities hold and Bonds will break. I do not believe that there is enough money on the sidelines to support both higher Bond prices and higher equity prices for the long term.

Grains: July Corn is currently 12’2 higher at 632’2, July Beans unchanged at 1381’0 and July Wheat 7’0 higher at 699’4. As noted in my last “Report” dated 4/23/2013 I recommended buying July Corn between 605’0 and 612’0, on last Wednesday it traded as low as 610’0. If you went long on this break, either take profits or use a protective sell stop at 623’0. We remain long out-of-the-money call spreads in Dec. Wheat. Markets are currently higher as talk persists of late planting because of excess ground moisture and a weakening dollar.

Cattle: June LC closed 30 lower at 122.60 and May Fc 40 lower at 141.80 on Friday. June LC are now 220 points above the lows made a week ago in response to the Apr. 19th Cattle on Feed Report and May FC 415 points higher. Last week I recommended buying breaks and I must acknowledge there weren’t many buying opportunities to be had on breaks.

Silver: May Silver is currently $0.36 higher at $24.13 and June gold is $14.00 higher at $1,468.00. We remain lightly long silver. I am on the sidelines in gold. Support for June gold is currently $1,430.00 and resistance $1,484.00.

S&Ps: June S&Ps are currently 5.50 higher at 1582.00. We continue to hold a combination of short futures and short the June 1520 put and must admit that this position has worked against us in the last week as the market started trading above last Tuesday’s resistance of 1564.00. For the near term support is currently 1568.00 and resistance 1586.00. If the 1586.00 resistance level does not hold the next level will be the 1593.00 area. A close below the 1558.00 level could indicate a retest of recent lows in the 1530.00 area.

Currencies: As of this writing the June euro is currently 56 higher at 1.3089, the Swiss 44 higher at 1.0657, the yen 46 higher at 1.0229 and the pound 19 higher at 1.5501. The June Dollar Index is currently 33 lower at 82.24. If you went short the June Dollar Index in the 83.30 area, either take profits or lower your stop to the 82.80 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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