Bonds balance Fed comments with poor Asia manufacturing data

Financials: June Bonds are currently 11 higher at 143’06 and the 10 Yr. Note 2 higher at 131’09. This morning’s weekly Jobless Claims fell by 23,000 versus an average expectation of a drop of 18,000. In the last 24 hours the bonds have had quite a range falling as low as 142’08 as the market sold off based on comments from Fed Chairman Bernanke that the possibility exists that the Fed may slow down bond purchases by September dependent on how the economy progresses. It is my understanding as I try to read between the lines that the Fed at present has no intention to start unwinding it’s past and current bond and mortgage backed securities. Overnight bonds rallied as high as 144’03 after the release of some disappointing manufacturing numbers out of Asia. All that being said we remain short the July bond 141’00/147’00 strangle, which is now about 24 points ($375) against us. Support is currently the overnight low of 142’08 and resistance the overnight high of 144’03.

Grains: July corn is currently 3’4 lower at 655’0, July beans 3’0 lower at 1491’2 and July wheat 4’0 higher at 692’4. I still like the long side of July Corn on breaks. We remain long out-of-the-money call spreads in July Wheat.

Cattle: Aug. LC are currently 10 higher at 119.32 and Aug. FC fractionally higher at 144.35. Yesterday the Feeders broke sharply and the live cattle broke moderately on demand concerns despite near record high beef prices. If you remain long Aug. LC from the 118.50 level either take profits or raise your sell stop to the 118.70 level. If the market trades above the 119.80 level, raise your stop to the 119.02 level.

Silver: July silver is currently $0.12 lower at $22.36 and June gold is $18.00 higher at $1,386.50. We continue to hold a small long position in silver as a long term trade. As for gold, I’m starting to get a bit friendlier and will continue to be a buyer on breaks below the $1,360.00 level for short term trades. Resistance is now the $1,405.00 area and the trend technically remains down.

S&Ps: June S&PS are currently 16.00 lower at 1639.50. How many times can we look at possible key reversals? Yesterday was another one and being someone who has trouble believing the market will see higher prices (I’ve been saying that for months and it has been “hazardous to my wealth”) I am going to the well one more time and once again recommend selling rallies. Yesterday may have been a capitulation high as shorts ran for cover with the release of FOMC minutes and comments from the Fed Chairman. For the near term support is currently 1628.00 and resistance 1656.00.

Currencies: As of this writing the June Euro is currently 65 higher at 1.2909, the Swiss 129 higher at 1.0338, the Yen 176 higher at 0.9865 and the Pound 39 higher at 1.5074. The June Dollar Index is currently 60 lower at 83.86. We were stopped out of any remaining short Dollar Index positions when the market traded above the 84.37 level.

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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