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<DIV><FONT color=#000000 size=2>You may have missed the early indications of
rising interest rates: DJ utility average has broken down severely after failing
to complete a full thrust to upside and bond futures also failed to complete
full thrust to upside and have moved into a down trend. The yield curve is
rather flat through bills and notes so it's hard to get a reading on how yields
will change across the curve, however I expect we'll see long bond at 5.6-5.7%
and a healthy rise in the intermediate sector of the curve.</FONT></DIV>
<DIV><FONT color=#000000 size=2></FONT> </DIV>
<DIV><FONT size=2>I'm not a fundamentalist, however my suspicion is that
the 3 Fed rate cuts have so stimulated the US economy that rates will move out
of the 17 year downtrend in rates into a flatter range between 4.75-5.75.
Obviously, US rates can not get too far out of whack with overseas rates, so
continued weakness in European rates should tend to mitigate the extent of any
US rise. We are seeing numerous signs pointing to a bottom/turnaround in Japan
and Asia including a near doubling of long term rates in Japan. What will be
interesting to observe is how any rise in US rates will affect the US equity
market - higher rates will drive the TBill/Earning Yield ratio even higher into
the danger zone unless PE's or prices begin contracting; however the public
appears to be oblivious to multiples.</FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><FONT color=#000000 size=2>So far, equities have shown signs of
consolidation rather than decline. We haven't even tested the s&p 1200 area
much less support for a normal correction in the 1170 area (all prices basis
March futures). We would would need to take out the 1147 low of 12/14 before I
would entertain the thought that the well-formed, 7 month, cup and handle (very
bullish) in the s&p is failing. Also, the Amex broker/dealer index, a good
leading indicator of major market declines, has yet to show signs of a
breakdown. I don't in any way disagree with points regarding breadth (a/d and
h/l) or sentiment, however divergences like this can last a very long time. When
these divergences develop, one needs to stick with the price action and wait for
the real price failure to develop. We may be in the early stages and we may not.
I've been seeing some very strange price action on the 9 and 45 minute charts,
however the past 10 days has provided higher highs and higher lows on the 45
minute chart so even here, we must take out 1223 and then 1210 before the price
picture turns negative.</FONT></DIV>
<DIV><FONT color=#000000 size=2></FONT> </DIV>
<DIV><FONT size=2>Earl</FONT></DIV>
<BLOCKQUOTE
style="BORDER-LEFT: #000000 solid 2px; MARGIN-LEFT: 5px; PADDING-LEFT: 5px">
<DIV><FONT face=Arial size=2><B>-----Original Message-----</B><BR><B>From:
</B>U.Stuart Auslander, NYC <<A
href="mailto:u.stuart-auslander@xxxxxxxxxxxxxxxx";>u.stuart-auslander@xxxxxxxxxxxxxxxx</A>><BR><B>To:
</B>RealTraders Discussion Group <<A
href="mailto:realtraders@xxxxxxxxxxxxxx";>realtraders@xxxxxxxxxxxxxx</A>><BR><B>Date:
</B>Tuesday, February 02, 1999 10:53 PM<BR><B>Subject: </B>Re: Market Trend,
continuation of bear begun in April 98<BR><BR></DIV></FONT>The 10 day moving
average of the CBOE put/call ratio has set a 3 year highs in the last few
weeks. This is in the context of the A/D line approaching 18 month new
lows. <BR>The divergence between the DOW and the A/D line suggests that the
present rally is very narow. Support is added by the behavior of the
Value line Geometric which has made only a two-thirds retracement of the
April highs.
<P><U>I have the sense that once the speculative euphoria starts to
diminish there will be little to hold stocks up.</U>
<P>If we do go into a major decline here, it will, however, be
unusual. We are lacking signs that typically occur at a cyclical top:
<BR>rising interest rates, <BR>escalating inflation, <BR>and conventional
FED restrictiveness on money.
<P>I suspect that the money figures are now misleading, since the dollar has
become an international currency. The currency figures included in
money supply are now 50% in circulation out of the country according to
estimates I've read. Lawrence Kudlow suggests that the real measure of
monetary tightness should be guaged by the trend of gold and commodity
prices. If that is reasonable analysis, then money is actually
tight. One measure of money is adjusted reserves of domestic
banks. That figure has been relatively static for the last 3
years. </P></BLOCKQUOTE></BODY></HTML>
</x-html>From ???@??? Wed Feb 03 09:40:14 1999
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Reply-To: spider@xxxxxxxxxxxxxxx
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Subject: Stock(s) E-Trade
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