Financials: Sept. Bonds are currently 18 lower at 151'05 and the 10 Yr. Note5 lower at 134'21. Yesterday the market approached long term resistance of the 152'16 area with a high of 152'10. The market receded from this level as the Dollar started to trade a bit lower against the Euro after making new recent highs. For the near term support is the 150'02 area and resistance the 152'10 area. Fed Chairman Bernanke gives a semi-annual speech today. As mentioned in the last few Reports, I prefer the short side of the market on rallies to the 152'15 area.
Grains: Dec. Corn is currently 3'0 higher at 775'4, Nov. Beans 5'0 lower at 1585'4 and Dec. Wheat 1'0 lower at 896'6. These markets continue to trend higher as a result of continued drought conditions particularly in growing regions East of the Mississippi causing shrinking yields in Corn. What was originally expected when planted, average yields of 155-160 bushels per acre for Corn could now be in the 130-140 bushels per acre levels. As we now approach all time high prices in Corn near the 800'0 level it is time to ask "Is it time to buy the rumor, sell the fact?" I expect to see high volatility in all the Grains for the near term. Over the last few weeks I have been recommending that producers (hedgers) only use put options for downside protection, I am going to now recommend that in addition to the use of puts, consider hedging 25% of your exposure with futures.
Cattle: Aug. LC are currently 70 lower at 116.10 and Aug. FC 240 lower at 133.65. These markets continue to work low, especially Feeder Cattle, as a result of higher feed grain prices. FReeder Cattle are now approaching long term support in the low 130's. If you are short this market either cover positions or use a very close stop. I will be looking to try the long side of the market on further sharp breaks.
S&P's: Sept. S&P's are currently 6.00 higher at 1353.50. I still feel that this market is a trading affair. That being said, now that this market has rallied 30.00+ points off of last weeks low of 1319.25, I am changing my bias from the long side of the market to the short side of the market on any further rallies as the market approaches the July 10th high of 1356.50.
Currencies: As of this writing the Sept. Euro is 7 higher at 1.2293, The Swiss 4 higher at 1.0240, the Yen 46 lower at 1.2653 and the Pound6 lower at 1.5619. We continue to look for short term trades in the Euro on breaks below the 1.2200 level.
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