Bonds fall as positive economic news dominates

Financials: June Bonds are currently 7 higher at 144’27 and the 10 Yr. Notes 2 higher at 132’01. Since last Thursday’s constructive Jobless Claims Report we were stopped out of any remaining long positions from the 146’16 area when the market traded through our protective sell stop at 146’21. Since that time the market has continued to move lower amid positive news for equities and a lack of negative general economic news. On the horizon traders will be reading carefully any news from the Fed relating to continued stimulus and watching the unemployment rate target of 6.5% and inflation rate target of 2.5% as indicators for future moves in the Bonds. For the near term I feel the bonds are starting to enter oversold territory with support in the 143’28-144’06 area. For short term trading I am a buyer on breaks with a protective sell stop at 143’25. Also, I am starting to look at selling strangles (combination of short out-of-the-money puts and calls) and will try and have a recommendation later in the week.

Grains: July Corn is currently 3’0 lower at 652’4, July Beans 3’2 higher at 1422’4 and July Wheat 1’0 higher at 710’6.We remain long out-of-the-money call spreads in Dec. Wheat. As for Corn: July Corn is currently trading at the level where we were stopped out of long positions on May 6 and feel there is resistance just above the market in the 660’0 area. For the moment I am going to remain on the sidelines.

Cattle: Aug. LC are currently slightly lower at 120.85 and Aug. FC 5 higher at 146.25 with both of these markets trading somewhat higher than my last “Report” (May 9). Producers who have been hedged with short Feeder Cattle positions might consider covering short futures hedges and replacing them with either out of the money puts or put spreads as these markets are showing indications of being oversold. Speculatively speaking, I will be looking to go long either June or August Live Cattle below the 118.50 level if the market allows.

Silver: July Silver is currently $0.46 lower at $23.24 and June Gold is $10.00 lower at $1,424.00. Gold has traded below its recent trading range of the $1,430s-$1,480s and may once again be breaking out to the downside and a test of the $1,405.00 level. If $1,405.00 does not hold this market the next level of support will be $1,360.00. Resistance is currently the $1,454.00 level. I still prefer the short side of Gold on sharp rallies. We continue to hold a small long position in Silver.

S&Ps: June S&Ps are currently 1.25 higher at 1632.00. I am on the sidelines at this time. Support is currently 1621.00 and resistance for the moment is this morning’s high of 1634.25

Currencies: As of this writing the June Euro is currently 3 lower at 1.2970, the Swiss 5 higher at 1.0442, the Yen 19 higher at 98.31 and the Pound 17 lower at 1.5270. Since my last report the Yen has broken through the 1.0000 level making a low of 97.90 a level not seen since October of 2008, the result Japan’s quantitative easing stimulus package which will greatly increase their money supply. The Dollar Index is currently 4 higher at 83.41. I am currently on the sidelines.

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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