Silver, 10 year notes, coffee, S&P, Swiss Franc and natural gas

Open and closes are from 6/15

SILVER (SEP 11) Open – 35.52 Close – 35.421
In the wake of the impressive rally in the dollar the past two sessions, silver is just mildly lower. Stocks of silver at Comex have dipped below the all important psychological level of 100 million ounces, but not by much. Strong demand from Asia has been supportive to the market. Debt fears in Europe are lending support. Fundamentally, we see demand for silver as strong both industrially and as a safe haven asset. Talk of the Feds raising rates will limit upside movement but we are still bullish. We are looking to get long below 34.

10 YEAR NOTES (SEP 11) Open – 122’18 Close – 123’22
It has been a crazy past couple of sessions for the bond futures. Weak TIC numbers coupled with the end of the buyback program look to have started to find their way into the notes. Technically speaking, the note is making new contract highs today and if it can close above 124 would signal a new bull leg in our opinion. The indices have been weak and we are seeing capital flow into bonds. We are bullish and long.

COFFEE (SEP 11) Open – 271.15 Close – 265.85
Coffee is trading at the low end of its range today and looks like it wants to test the 260 level again. The market has started to price in the possibility of a frost in Brazil and lower production from Columbia. The dollar rally of the past few sessions is also weighing on prices. We see potential supply disruptions out of South America as they go into their off-cycle harvest. We are bullish and continue to hold our legs, although any violation of 255 could trigger more selling.

S&P (SEP 11) Open – 1283.75 Close – 1260
The S&P gave back of all of Tuesdays’ gains yesterday. Jobless claims and housing starts come out within range today, but we are seeing weakness in the banking sector. The VIX is at its highest level since mid March. We see this market grinding lower until it hits support at 1240. We did offset some of our shorts at the 1253-1255 level. Our new target for our shorts is 1245.

SWISS FRANC (SEP 11) Open – 118.37 Close – 117.25
The Swiss Franc has sold off a tad the past few days which is not surprising given the recent 3.5% rally in the dollar. The SNB left rates unchanged but said that they were concerned with the franc’s appreciation. Most analysts agree that the SNB will most likely raise rates in September. The uncertainty with Greece still makes the franc attractive as a flight to quality asset. We are bullish and we did initiate some new longs near 117. We see strong resistance at 120.

NATURAL GAS (JUL 11) Open – 457.3 Close – 457.7
Milder weather and a stronger dollar have sent natural gas down nearly forty cents the past few sessions. We are also seeing shipments of natural gas decline as the weather looks to have cooled off in the Southeast. There is some spillover selling coming from crude, as it has broken some key technical support. We are bearish and see natural gas grinding down back to the low end of its rnage, near 400, eventually. We have a profit target of 420.


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