The Nemenoff Report 12/13/12

Financials: Mar. Bonds are currently 10 lower at 147’24 and the 10 Yr. Note 3.5 lower at 132’30.5. Yesterday the FOMC left rates unchanged with Fed Funds yielding between 0.0% and0.25%. The Fed announced that they will continue to buy $40 billion dollars worth of Mortgage Backed Securities on a regular basis and also $40 billion worth of long term Treasuries on a regular basis as part of it’s stimulus program. Bernanke said he is willing to experiment with this kind of stimulus and risk rising inflation as a method of stimulus to bring more spending because of lower rates with the result being more jobs. The upside of job creation outways the downside of inflation. The Fed also said it would continue its program of keeping rates low until the Economy broke through a number of thresholds, two of them being a jobless rate of 6.5% and inflation rate of 2.5%. These thresholds are not expected to be met until possibly 2015. The reaction in the market trended towards rising inflation with the Bonds closing below the 148’26 support level trading as low as 147’30. This morning the Weekly Jobless Claims Report showed a decline in claims of 29,000 vs. expectations of a decline of 5,000. PPI came in at down 0.8% vs. expectations of of down 0.5%. Retail and Food sales were +0.35 vs. +0.5%. The decline in Jobless Claims outweighed the slightly negative numbers of PPI and Retail Sales pushing the market down to new recent lows of 147’21. We are now approaching long term support just under the 147’10 level and I feel that short term traders should start looking for trading opportunities from the long side of the market with a defined risk of no more than $500.00 per contract. In other word “Don’t Fade the Fed” by selling support.

Grains: Mar. Corn is currently 1’2 lower at 724’2, Jan. Beans 7’0 higher at 1480’4 and Mar. Wheat 3’4 higher at 815’4. We are once again long Mar. Corn with a protective sell stop at 703’0. If the market trades above the 733’0 level, raise your stop to the 713’0 level. We continue to hold out of the money call spreads in Mar. Corn. Beans may have broken out to the upside.

Cattle: Feb. LC are currently 22 higher at 132.22 and Mar. FC 50 higher at 155.20. These markets are now trading in resistance.

Silver: Mar. Silver is currently 1.00 dollar lower at 32.80 and Feb. Gold 23.00 lower at 1693.00. We remain long our original core position of Silver and have been stopped out of the purchase of additional contracts from the 32.75 area. We were stopped out of long Gold positions when the market traded below the 1705.00 level overnight. I will be willing to once again look to the long side of Gold below the 1675.00 level if the market allows.

S&P’s: Mar. S&P’s are currently 50 lower at 1420.50 (trading 6.25 discount to the Dec.). Since the FOMC meeting yesterday afternoon the market has set back about 12.00 points establishing resistance in the 1432.00 area. Concerns about inflation, year end profit taking because of the possibility of increased capital gains taxes next year and the unresolved possibility of the “Fiscal Cliff” I suspect will put a cap on the market for the next couple of weeks. Support for Mar. S&P’s is currently 1412.00 (1418.50 for Dec.). Treat as a trading market, personally I still prefer entering the market from the short side on rallies). Use close stops.

Currencies: As of this writing the Mar. Euro is currently 2 lower at 1.3091, the Mar. Swiss 16 higher at 1.0836, the Mar. yen 40 lower at 1.1991 (new recent lows) and the Mar. Pound 8 lower at 1.6147. I am currently on the sidelines. That being said, I will be looking to the short side of the Euro above the 1.3160 level.

Regards,
Marc

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