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I agree that a major top is forming.
The catalyst will be reduced earnings due to the high US$ rather than high
interest rates. The Dow really took off early in '95 when the US$ fell from
100 Yen, 1.57 DM to a low of 80 Yen and 1.35 DM - the US$ had been at 111
Yen and 1.75 DM early in '94 (does anyone have figures or a graph for the
US$ Index?). These falls lead to an export led bull market with rising
Company earnings.
The cycle has been reversing during '97 with the US$ rising recently above
120 Yen and 1.80 DM - pre '94 levels. Combined with crashing Asian
currencies, exporters will be looking down the barrel when their forward
cover runs out. Export stocks will then find themselves substantially
over-valued with earnings falling rapidly - its only a matter of time. To
offset such large currency movements would require an unrealistic increase
in export volumes.
Therefore non-export Companies will be the best investment, especially
manufacturers that import raw materials which will be substantially cheaper,
but ultimately there will be a flow on effect.
Steve
>At 09:04 2/09/97 +0200, Dr Clive Roffey wrote:
>I must be looking at a different set of chart data to many of the
>readers.
>
>As far as my analysis goes this is a MAJOR TOP. We are not playing games
>here. Forget about a minor correction and then new highs. This is a huge
>world wide top formation on all markets. The Far East has already
>started its bear market.
>
>I would not be involved in any overseas mutual funds other than precious
>metal orientated funds.
>Best of luck to all the bulls.
>Clive Roffey.
>
>
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