Oil, Metals, Cattle Rally

Financials: Dec. Bonds are currently 11 higher at 156’24, 10 Yr. Notes 1 higher at 128’16 and 5 Yr. Notes fractionally lower at 120’13.5. FOMC minutes, released Thurs. afternoon, indicated that the Fed is preparing to raise rates in the near future, be it 4th quarter this year or 1st quarter 2016. For the moment such a determination is data dependent with the Fed wanting to see an uptick in inflation and an improved labor market. Concerns are slowing growth in China and sluggish commodity prices. In anticipation of a rate hike we remain spread long June 2015/short June 2017 Eurodollars, currently trading at 58 points premium the June 2015 contract. We initially entered this position at 62 points. Although the postion has improved this week we are still at a small loss.

Grains: Dec. Corn is currently 2’4 higher at 393’6, Nov. Beans 3’4 higher at 884’6 and Dec. Wheat 3’0 higher at 514’4. Crop Production Report and Supply/Demand will be out at 11:00am Chicago time and could move the market dramatically. If you reman long Dec. Corn either take profits or continue to use a protective sell stop at 382’2. Of note: Corn has been flirting with the 400’0 level this week, making a high of 399’6. If the 400’0 level is exceeded after the release of the Report raise your stop to the 388’4 level.

Cattle: Live and Feeder Cattle have had a dramatic rally off of recent lows rallying in excess of 1000 points on lead month contracts. As mentioned in my last “Report” I have been anticipating the Oct. LC contract to gain on the Dec., this has occurred as the Oct. has gone from 940 under the Dec. to 650 under. Dec. LC cattle is now approaching resistance in the 138.50 area and I will be a trader from the short side in the 138.75-140.00 area. We continue to hold the short Dec. LC 135/145 strangle which is now just 45 points against us at 465.

Silver: Dec. Silver is currently 15 cents higher and Dec. Gold 7.5 higher at 1152.00. We remain long Silver and will use a sell stop just below yesterday’s low of 15.375.

S&P's: Dec. S&P’s are currently 4.00 higher at 2010.50. The recent rise in commodity prices, particularly oil, has rallied equities. I am on the wrong side of the market at the moment and looking for a break to lessen my losses. Resistance in the 1992.00 area was penetrated yesterday, putting resistance now at the 2017 area. Near term support is currently 1976.00. Treat as a trading affair.

Currencies: As of this writing the Dec. Euro is 81 higher at 1.1365, the Yen 20 lower at 0.83200 and the Pound 13 lower at 1.5335. I still feel that overall the Dollar will weaken and that the Euro will continue to gain on the Pound. That being said I look for resistance on the Euro in the 1.1450 area. I am also looking to go long the Yen with a protective sell stop at 0.8120.