COMMODITY INSIGHT
152 Ennis Lake Road,
Ennis, Montana

(June 8, 1997) FINANCIALS: Stocks and bonds rose sharply last week and in particular on Friday, following the release of an Employment report. The report is suggesting that the U.S. unemployment rate is now at its lowest level since 1973.

Normally, one would assume that stocks and especially bonds would be hit and hit hard following a report showing unemployment at a 25-year low. But rather than fall, stocks and bonds soared. The week ended with the mighty Dow Jones up 130 points to 7435 while bond prices closed at a four-month high. And stock futures, never to be out done, closed 1650 points higher for the day which represents $8250 per futures contract. Stock futures by the way, have rallied $62,350 per contract since the low set on April 11. Stock futures are in a world of their own!

My work for the past several months has been suggesting that the Dow would rise to the 7500 to 7600 level on this leg of the bull run. Nothing has surfaced to change my forecast. However, once the Dow rises to the upper end of my objective along with a bond market of 112-00 or higher, I will turn ice cold bearish on the Dow. In other words, once the Dow rises another 165 points while at the same time bond prices exceed 112-00, the time will be ripe for the short side of the Dow to be probed. And both those levels could be achieved this week.

Jerry F. Welch

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