wmeubank@ocp.kcmo.com
ASPRAY'S GLOBAL TRADER
Dollar Higher As Stocks Choppy
But Higher Dollar Ready to Test
BOJ At 127 Yen/Dollar
The markets are reported as of the close Thursday.
The dollar had another generally positive performance Thursday, but the wide swings in the U.S. stock market made the FX trading choppy as well. The short-term technical picture for the dollar has improved, but there are no signs yet that a significant bottom has been completed. The dollar rally is likely to stall at next strong resistance.
The trading in the yen/dollar was especially wild Thursday as rumors of intervention caused a sharp decline in the yen/dollar as many stops were hit. The technical picture is still clearly positive and break out above 127 still looks likely.
DEUTSCHEMARK/U.S. DOLLAR: The dollar has finally been able to overcome the near-term resistance at 1.7300 in Friday trading with more important resistance at 1.7350-7400 and then at 1.7500. The daily downtrend is much higher in the 1.7800 area. The 38% resistance level of the decline from 1.7923 is at 1.7325 with the 50% level at 1.7440. Good support now at 1.7200-50. RSI3 did form a divergence at the lows and is still rising.
Summary–Traders are 25% short at 1.7372-1.7414, stop at 1.7457. Added 25% short at 1.7186-7244, covered in the 1.7174- 7230 area.
DEUTSCHEMARK/YEN: The DMK/yen is still correcting from the highs at 73.70 with first good support at 72-72.40. Should be 25% long at 69.44-74, stop at 71.37.
SWISS FRANC/U.S. DOLLAR: The dollar has reached resistance at 1.4050 with stronger in the 1.4100 area. Traders are now 25% short at 1.4287-4321, stop at 1.4343.
Dollar Rally Stalls, Move Above 127
Likely
The dollar's strong push above the 126 level has made some traders nervous but not the central bankers. Rumors Thursday caused a sharp setback in the dollar as so far the resistance is 126.50 is limiting the upside. Initial support at 125.50-70 with more important in the 124.80-125 area. The daily chart shows the breakout above the upper trendline resistance. A move through 127-127.50 still looks likely. The 130 level should be tested by the end of the year. The daily studies like the APMosc are clearly positive with no signs yet of a top.
Summary–Go 25% long at 124.77-125.44, stop at 124.37.
STERLING/YEN: The STG/yen has pulled back from the 215- 216 level but still the cross is trending higher. Traders are 25% long at 200-200.54, stop at 208.33.
SWISS FRANC/YEN: The cross has consolidated over the past few days near-term support at 89. Traders are 25% long at 84.40-76, stop now at 87.73.
CANADIAN DOLLAR: The dollar has again turned lower from the 1.4100 level with first support at 1.4050. Now 25% long at 1.3992-4026, stop at 1.3966.
Sterling Corrects To First Good Support
The sterling has corrected sharply from the 1.7100 area and looks ready to test the support at 1.6900-30. If it is broken, next support at 1.6850. Traders are 25% long at 1.6822-65, stop at 1.6867.
STERLING/DEUTSCHEMARK: The cross is still stalled below the resistance at 2.9350-9400. A higher close this week looks likely and should significantly improve the technical outlook. Traders go 25% long at 2.9240-9300, stop at 2.9315.
STERLING/SWISS FRANC: The STG/SWF still has key resistance in the 2.38-4000 area with first good support in the 2.3650-3700 area. The technical studies have improved they are not all positive yet.
DECEMBER T-BONDS: The bonds rally over the past few days indicates the correction is over. Next targets at 11916- 120. Traders are 25% long at 11712-23, stop at 11711. Added 25% long at 11806-12, stop at 11803.
U.S. STOCK MARKET: The higher close Thursday should lead to a further rally Friday and early next week back to the 940 area. Was short the December S&P at 946.50- 949.50, covered below 920.
November 14, 1997Thomas E. Aspray
APM Asset Management
P.O. Box 15366, Little Rock, Arkansas
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