SEPTEMBER BONDS: This week's setup is a mirror image of that of two week's ago (week of 6/2/97). Instead of payrolls, it was a weak Retail Sales report last week which helped push bonds to new highs (111.17 at the time of publication). Daily and weekly momentum indicators continue to provide bullish readings, with dailies skirting a possible bearish crossover. Our near-term target is for a test of resistance at 111.24. A break above this level would position bonds within the next wave of trading (111.24-113.09). As bonds approach overbought territory on both daily and hourly charts, watch for a similar pull-back to open the week, as we saw last week after the employment report. Support lingers below the market at both 110.31 and 110.15 (62% retracement of 2/18-4/11 move).

S&P 500: Last week's call for a bearish divergence in daily RSI proved to be premature, as RSI rebounded making new highs along with price. This confirmation, along with that of daily stochastics, has swung us back to the side of the bulls. Although we still are fearful of a reversal from within overbought territory, especially considering weeklies are already narrowing, the risk/reward clearly favors longs at this time. At the time of publication, the Sep contract was making new contract highs at 893.80. Primary resistance lies above the market at 900.00, with primary support in the 860.00 area.

DOLLAR/DEUTSCHEMARK: As daily and weekly charts continue to bullishly align themselves for a breakout, we are looking towards resistance at 1.7340 (6/2 weekly high) to provide the first hurdle. Once this is broken, we look towards the upper weekly bollinger band at 1.7405. Confirming our bullish outlook are both bullish momentum readings and the increasing slope on daily and weekly 21- period moving averages. The market should find support this week in the 1.7073/78 area, although we are not expecting this to be tested.

DOLLAR/JAPANESE YEN: Dollar/yen finally broke out of its consolidation band centered around 116.00. The breakout brought $/yen to lows near the mid-110's, before it was able to bounce all the way back to its previous range. With this bounce coming as fast and as hard as it has, we are switching our bearish bias to neutral. If $/yen can break through resistance at 116.98, it could pick up an addition 1 to 2 big figures. On the flip-side, if $/yen retests high-116's and fails, the new lows attained this week will be seen again all too soon.

June 12, 1997
Gregory P. Fortuna
Thomson Research
22 Pittsburgh Street,
Boston, Massachusetts

Consensus National Futures and Financial On Line Index
Technical Corner Index

Added to the WWW 06-14-97
Last updated on 06-14-97

Hosted by:
One Crossroads Place
610 West Maple Ave, Suite WWW
Independence, MO 64050
(816) 252-4080
sysop@kcmo.com

wmeubank@ocp.kcmo.com