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800-821-4967(March 30, 2000) STOCK INDICES: The markets, in general, have sold off this week as Abbey Cohen reallocated less stock and Templeton's Mobius predicted a net crash sometime this year. End of quarter window dressing may affect trade through Friday as money managers adorn their portfolios. Long-term rates under 6%, which is an overall positive. The Fed is expected to continue to raise short-term rates, an inevitable negative, unless there is some fundamental shift or event which alters their focus. Should the markets (NASDAQ) continue to surge upward, doubtful at this point, expect the Fed's attention to be directed toward curbing any excessive speculation by raising margin requirements.
Thus far the SPM's have held support at old contract highs at 1514.50 both Wednesday, March 29 and early Thursday, March 30. If this area fails to hold, a quick sell-off to 1480 and then 1463.50 shouldn't be unexpected. Any close below 1463 projects a target of 1434. Resistance lies solidly at new contract highs of 1574 and any close above this area projects the 1596-1600 range.
Fed likely to continue raising short-term rates incrementally with the possibility of a 50-basis point hike increasing, especially if NASDAQ makes new highs. Any increase in margin requirements would harm overall market. Expect increased volatility.
SUPPORT BASIS SP/M--514.50**, 1480, 1463.50*, 1434*, 1374.50, 1367* and 1347**.
RESISTANCE BASIS SP/M--1574**, 1596-1600*, 1625 and 1650.
William Bayer
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