wmeubank@ocp.kcmo.com
COMMODITY REVIEW AND OUTLOOK
195 Route 6A, Suite 6,
Orleans, Massachusetts
(June 11, 1997) BONDS: Most traders seem to be positioned for
Thursday's Retail Sales report, which is probably one reason why trading
has been lackluster. Hedge selling has been a big feature over the last
week. Dollar action is keeping traders a bit on the indecisive side. Last
Friday's close was the highest since the end of February, so if nothing
else, bonds look good on the charts. The focus of the market for the near
future will be whether or not the Fed will raise rates in July. While I
think the bonds look good on the charts, and arguably signal a move quite
a bit higher, it will be difficult for the market to stage a move higher
if there is fear of Fed tightening. However, for the short term, support
may hold and encourage buying as most recent reports have not suggested
an environment in which inflation is an issue.
RECOMMENDATION--Play the range. Last Friday's breakout could be signaling a move to approximately 112.00 or so, so sellers should use caution. For the time being, traders might buy September bonds on dips to 110.00-110.12 with stops of 16 or so ticks, and/or sell a rally to 111.14-111.09. If more conservative, sell a rally to the upper 111.00's-112.00 with the same type of stop. Look for a decline back to the low 110.00's. Resistance is near 111.14-111.19. Support may develop near 110.20 and 111.10 or so.
M. Steven Morgan
Added to the WWW 06-14-97
Last updated on 06-14-97
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