Bonds break lower as questions mount over Fed stimulus

Financials: Sept. Bonds are currently 10 lower at 138’19. This market has broken sharply since early Friday morning after the monthly Employment Report, which had the bonds as high as 141’11 up slightly reacting to a small uptick in the unemployment rate. Needless to say I am currently suffering mounting losses as the market anticipates a paring down of the monthly bond purchases by the Fed. The question be when not if. I remain skeptical and feel this will occur later, not sooner. That being said I am coming close to my point of tolerance on this trade and am thinking about an exit strategy in the next few days. That being said, I am a buyer on breaks below the 138’10 level for short term trades with protective sell stops just below the overnight low of 137’25.

Grains: July Corn is currently 2’0 higher at 652’0, July Beans 9’0 higher at 1520’6 and July Wheat fractionally lower at 689’2. On last Friday the July Corn approached my sell level of the 675’0 area (the high was 674’0). If you went short in this area, I recommend taking profits and standing aside until after tomorrow mornings (11:00am) Grain Reports.

Cattle: Aug. LC are currently 15 higher at 118.57 and Aug. FC 12 higher at 143.55. For those of you keeping track, there were 0 deliveries on first notice day (yesterday afternoon) given the current discount to the cash market with the oldest open date of Aug. 3rd 2012. This (the oldest date) will change quickly. I remain on the sidelines but note the market is near support of contract lows.

Silver: July Silver is currently $0.38 lower at $21.52 and Aug. Gold $17 lower at $1,369.00. As noted last week if gold fails to hold the $1,385.00 level it will probably be headed lower maintaining its long term downtrend. Currently support is the $1,358 level and resistance just above $1,403.

S&Ps: June S&Ps are currently 15.00 lower at 1627.00. I remain negative and continue to be a seller on rallies. Currently support is the 1623 level and resistance 1643.

Currencies: As of this writing the June Euro is currently 10 lower at 1.3252, the Swiss 42 higher at 1.0763, the Yen 186 higher at 1.0317 and the Pound 26 lower at 1.5558. the Dollar Index is 14 lower at 81.51. I feel volatility is too high to position these markets at this time. For short term trades I will be a buyer on breaks with a small risk tolerance.

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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