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Financials: Dec. Bonds are currently unchanged at 137’12, 10 Yr. Notes 2.5 lower at 117’29 and 5 Yr. Notes 1.75 lower at 111’31.5. Last week we took profits on the yield curve spread of long 5-10 Yr. Notes/ short 3-30 Yr. Bonds. This spread has continued to work but I feel it’s about to exhaust it’s momentum. Over the last 3-4 months we have seen the yield spread go from about even to 28 points premium the 30 Yr. Bond. Go back about a year and I think the spread was 25-30 basis points premium the 30 year. Possible double top on the yield curve and a signal to me to head for the sidelines until a new reason to be involved in treasuries evolves.
Grains: Dec. Corn is currently 0’6 higher at 373’0, Jan. Beans 2’4 higher at 882’0 and Dec. Wheat 1’6 higher at 511’6. We have been stopped out of a short Dec. Corn position from the 372’0 level resulting in a scratch. There is a crop production report at 11:00 am (Chicago time). Some analysts are quietly predicting a drop in yield per acre in Beans from the last report. I feel Beans should be sold above 925’0 and Corn above 384’0.
Cattle: Feeder and Live Cattle have been trending lower in a choppy trade over the last. I do not at this time have a strong opinion, that being said, I will buy Dec. LC under 114.00 and sell above 119.00 with a 150 point risk.
Silver: Dec. Silver is currently 4 cents lower overnight at 14.53. I remain long with a stop at 14.13.
S&P’s: Dec. S&P’s are currently 10.00 lower at 2806.50, Last week I recommended taking profits on out of the money calls. I feel we have seen enough of a rally to look to the downside and recommend buying puts/and or put spreads 50.00(2750.00)-100.00(2700.00) points out of the money.
Currencies: As of this writing the Dec. Euro is trading 30 lower at 146.10, the Yen 29.5 lower at 0.88185, the Pound 38 lower at 1.3132 and the Dollar Index 22.8 higher at 96.305. I’m a seller in the Dollar Index on rallies and a buyer in the Yen and Pound on breaks for strictly technical reasons. I am staying away from the Euro for the moment.