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<DIV><FONT size=2>Interesting analysis Stig. I will put my two cents in. I
concur with your thinking that it can go either way really. Before making
everybody read through everything the conclusion is this: <STRONG><EM>While this
is the best chance in a long time that the bond market has bottomed, I still see
risk to the 109-10 area. I see virtually zero chance of us getting significantly
lower than that without at least an eight point, and more likely a 10-12 point
rally.</EM></STRONG> There is a shot at us having bottomed, but I am not yet
convinced that we have.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>Let's look at some of the evidence:</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>1) We have broken the trendline from 1984 on futures. We
have barely broken the trendline from 1994. Lessening the importance of the
futures trendline break is that the trendline on the yield chart from 1984 broke
a while ago and the line from the 1981 yield highs is still miles away. So
overall, the trendline situation is less dire than it seems as only the line
from 1994 on the yield chart and the less important futures 1984 line have
fallen.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>2) The pattern since the highs last year shows three clear
waves. The question now is: Have we been in a falling wedge the last couple of
months, which we have broken below with little follow through, leaving a
potentially bullish situation, or did we have a 4th wave descending triangle
completed at the recent 115-15 high implying bonds have been dropping in wave-5
since there? I had been leaning to the triangle, but the trading is more
wedge-esque. I do not see the break as being the end of the world, but if we do
not bounce quickly it does imply lower prices.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>3) The drop, if it is part of a wedge, should be a three leg
move (though the wedge has broken). The first leg was 115-19/112-19, so that
would target even higher at 110-18 from the 113-15 bounce high on 4-Oct if we
get equality. If it extends 1.618 times, we 108-25. </FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>4) Depending on how you count wave-1 in Oct 1998, equality is
in the 8-04 to 8-19 range. From 115-16, that implies 107-12 to 106-29, but 62%
of that comes in at 110-15 to 110-06. The 76.4% ratio target is 109-09/108-30.
The low yield was 4.67% and 1.38 times that is 6.45% which should be near
109-10.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>5) As for the head and shoulders pattern, I have no real
comment on it. The Elliott picture is much preferred to me since a h&s comes
out of a wave story anyway and EWave measures are more reliable than the classic
neckline/head measure. I do expect a test of the neckline, and even a small move
above it is possible, but preferably from a few points lower. Ultimately, some
time in 2000, after we first rally to 5.50/38%, we should see yields zip up to
6.50% with 7.00% not impossible, but the next few months should be
bullish.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>6) Q4 tends to be bullish for bonds.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>7) Open interest has been flattish lately. It might be due to
stupid hedge fund tricks (remember it fell thru last summer too, though the
capital markets seized up then and prices soared). More likely, the lower o.i.
is due to lower corporate issuance due to higher rates (I am not sure if that is
true, since I do not follow corporates, but there was a heavy Sep calendar, and
Oct may be slower). Less hedgers, less o.i. But, lack of gains in o.i. if there
are no such influences reeks of a weakening (down) trend.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>8) I do not read the data as being that bad from Friday.
Everybody is bearish. The economists are still praying to the holy NAIRU grail
(and I suppose finally after two or three years they are getting close to being
right), but we now have two consecutive months with low job growth. Also, the
earnings data that were called not as good as it said in August due to drops in
manufacturing jobs (high paying) had the converse this month (more manufacturing
jobs added and low paying retail jobs lost). Work week was not strong either.
These are good numbers that the markets are ignoring. It sounds more like some
bad longs that will be capitulating (lower o.i.?) over the next few
points.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>9) If I had to have a position on, it would be short, but only
small. If I was running a mutual fund, I would be flat to small long and buying
all dips getting set to have the boat loaded for that 8-12 point rally. If I was
not bottom picking, and we rally straight off, either buy on break above the
trendline in the 115s (or wait for pullback after break) while aggressive types
can buy above 113-17 or 114-02.</FONT><BR>---<BR>Steven W. Poser,
President<BR>Poser Global Market Strategies Inc.</DIV>
<DIV> </DIV>
<DIV>url: <A
href="http://www.poserglobal.com";>http://www.poserglobal.com</A><BR>email: <A
href="mailto:swp@xxxxxxxxxxxxxxx";>swp@xxxxxxxxxxxxxxx</A></DIV>
<DIV> </DIV>
<DIV>Tel: 201-995-0845<BR>Fax: 201-995-0846</DIV>
<BLOCKQUOTE
style="BORDER-LEFT: #000000 2px solid; MARGIN-LEFT: 5px; MARGIN-RIGHT: 0px; PADDING-LEFT: 5px; PADDING-RIGHT: 0px">
<DIV style="FONT: 10pt arial">----- Original Message ----- </DIV>
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black"><B>From:</B>
Stig O
</DIV>
<DIV style="FONT: 10pt arial"><B>To:</B> <A
href="mailto:realtraders@xxxxxxxxxxxx";
title=realtraders@xxxxxxxxxxxx>realtraders@xxxxxxxxxxxx</A> </DIV>
<DIV style="FONT: 10pt arial"><B>Sent:</B> Saturday, October 09, 1999 3:59
PM</DIV>
<DIV style="FONT: 10pt arial"><B>Subject:</B> Long? Bonds1</DIV>
<DIV><BR></DIV>
<DIV><FONT color=#000000 size=2>It seems like, once again, we are at
crossroads with US T-Bonds and one of two outcomes will be followed by a
dramatic development, perhaps not as dramatic as with gold, but dramatic
enough!</FONT></DIV>
<DIV><FONT color=#000000 size=2></FONT> </DIV>
<DIV><FONT size=2>Sorry for clogging the pipeline with all the gifs, but I
hope you will find them interesting (if you are into bonds or interested in
"coincidences)".</FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><FONT size=2>I am not including the gigantic wedge, starting 1984,
from my sep 13 post, where we can see a marginal break without follow through.
</FONT></DIV>
<DIV> </DIV>
<DIV><FONT color=#000000 size=2>However </FONT><FONT size=2>the "weekly".gif
below, shows:</FONT></DIV>
<DIV><FONT size=2>1 mega support in the 112 area</FONT></DIV>
<DIV><FONT size=2>2 The highest fib trendchange indicator for a long time(see
timeclusters)</FONT></DIV>
<DIV><FONT size=2>3. OBV was not near a break, when we had the feeble break in
price</FONT></DIV>
<DIV><FONT size=2>4 Hidden divergence in CCI (loower low (1997-1999 lows)in
CCI/higher low in price -> bullish)</FONT></DIV>
<DIV><FONT size=2>5 Positive divergence in CCI at the most recent lows(in
1999)</FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><FONT size=2>This chartpicture shows high probabillity for a
trendchange.(UP)</FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><FONT size=2>to be continued.....</FONT></DIV>
<DIV><FONT size=2></FONT> </DIV></BLOCKQUOTE></BODY></HTML>
</x-html>From ???@??? Sat Oct 09 23:41:45 1999
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Date: Sun, 10 Oct 1999 00:54:36 -0500
From: John Ahaus <jahaus@xxxxxxxxxxxxxxx>
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Can we make it mandatory to post to the list in 10 point typesize
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