|
PureBytes Links
Trading Reference Links
|
Steve,
Based on your analysis about two weeks ago, I think it would be safe to say
it has bottomed. I think resistance is in the 116-24 to 28 area, and if we
clear this then it is possible to reach the 11721. Comments?
-----Original Message-----
From: swp <swp@xxxxxxxxxx>
To: Realtraders <realtraders@xxxxxxxxxxxx>
Date: Friday, August 13, 1999 9:27 PM
Subject: My thoughts on bonds and a little stox...
>Bonds put in a pretty good performance last week. The candle chart for
>Friday could be considered a bullish engulfing line, although we only
>matched the low from earlier this week, and the weekly candle looks to
>be a hammer. The real question right now is whether or not bonds have
>bottomed.
>
>Consider that we do have a decent five wave pattern down on the daily
>chart from 117-21 (though the intraday pattern is less clear). But, we
>failed to get below the previous (Globex) low at 113-05. I really do not
>like failed 5ths.
>
>To be sure, one would expect that open interest fell yesterday. So,
>Friday almost certainly saw a decent amount of short covering. Remember,
>we had an auction on Thursday and there was lots of hedging. If the PPI
>data brought real demand, then the street had a lot of covering to do.
>And o.i. has been rising of late too.
>
>Sometimes, short covering does turn into real buying. I have seen o.i.
>decrease at times at the start of a rally, especially when it is at very
>high levels as a trend ends. There is some risk of that now.
>
>For hints, we should watch a few levels. First place to look is 114-27.
>That is 62% back to the 115-24 peak the prior week. Above there makes it
>less likely that we are nesting within the five wave drop from there.
>Then, we want to rally past the 50% retracement of 117-21/113-09 at
>115-15 and take out 115-24. At this point, the bulls are going to be
>feeling mighty big. BUT, the real test comes from the trendline off
>lastyear's highs, at 116-01 on Monday and falling around 2/32nds per
>week. A burst through there, which would also be well above the 62%
>retracement of the fall from 117-21 (115-21) would be a good sign that
>bonds have bottomed. Absent that activity, I will have to assume that a
>bottom is not in as yet.
>
>More things to be aware of: Indicators are bullish. For one, WEEKLY MACD
>crossed positively a couple of weeks back from its lowest level since
>its low in 1996. Daily stochs also crossed positively today. We also
>came within 3/8ths of a point of the long term trendline going back to
>1984 on futures.
>
>The only reason to be concerned that bonds are not set to rally is that
>I still suspect that equities have lower to go. Though, even that is
>less clear after today's pop. Bonds can rally well past 120 if this is a
>bottom for now.
>
>The market is coming to the realization that though the Fed is likely to
>increase rates on the 24th, that will be the only hike, certainly for
>the rest of this year. The odds then are no inflation, with an outside
>chance (okay a snowball's chance in hell) that the economy could slow up
>just a tad -- enough to satisfy the Fed, keep inflation at bay, and
>untighten the labor market a bit. That will also be enough to send
>stocks and bonds higher again.
>
>The bottom line is we are not and never were in full crash position.
>Though I still prefer a run at cash SPX to 1230 or so, my extended 1170
>target looks less likely now. And bonds will need strong price data to
>convince them that the Fed could go again in October. It is highly
>unlikely they go after that, especially with Y2K.
>
>---
>Steven W. Poser, President
>Poser Global Market Strategies Inc.
>
>url: http://www.poserglobal.com
>email: swp@xxxxxxxxxxxxxxx
>
>Tel: 201-995-0845
>Fax: 201-995-0846
>
>
|