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WESTFALIA INVESTMENTS
TECHNICAL COMMENTS
The economic numbers of the week still point to a strong economy. Personal income rose .04% in September, showing no signs of deterioration. The National Association of Purchasing Managers showed manufacturing still health with little upward pressure in prices. The focus of attention for the financial markets will be the October employment report. As we see it, there is little reason to believe that the conditions of the tight labor market are about to change. We see labor costs being consistent as in past reports.
EQUITIES: The stock market has recovered all of the October 27th losses. Our technical indicators now suggest that the market is getting ready to retest the 8000 level. We believe investors confidence is being fully restored, as investors focus on the strong economic fundamentals. We have been calling for the market to reach new highs by year end, but, we admit that the latest correction may postpone that goal for awhile. However, we continue to believe that asset allocation to the stock market should remain unchanged. We continue to see volatility as the market attempts to move towards the 8000 level. We recommend buying on dips as the market moves higher in the short term.
GOLD: Still little incentive to move prices higher. No change. Trading affair.
BONDS: The move by the Bank of England to raise their repo rate to 7¼ from 7% should have little impact on U.S. rates. We continue to look for long-term rates to trade between 6- 6<$E3/8>%.
DOLLAR: No change.
November 6, 1997Peter Cardillo, Director of Research
Westfalia Investments, Inc.
90 West Street, New York, New York
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