The markets are reported as of the close Wednesday.

The dollar's decline in early trading was well supported especially versus the DMK. The failure to break more important support and the higher close has improved the technical studies. Several will turn positive with a higher close Thursday. The short side of the dollar is still favored by most traders but a further rally will squeeze the shorts, which is looking more likely.

The dollar has corrected sharply early Thursday versus the yen and the crosses are acting toppy.

DEUTSCHEMARK/U.S. DOLLAR: The daily chart shows some improvement and once above the resistance at 1.7400 the dollar should be able to test the 1.7450- 7500 area which is the 50% retracement level. The daily downtrend is now at 1.7570. Longer-term resistance at 1.7650-7800. Initial support at 1.72507300 with stronger at 1,7200. The RSI has turned up now after hooking down Monday. It is stronger than prices with key resistance. The APMosc has improved to —3.

Summary–Traders are 25% short at 1.7372-1.7414, stop at 1.7433.

DEUTSCHEMARK/YEN: The cross has dropped sharply with key support at 72.70. Should be 25% long at 69.44-74, stop at 72.57.

SWISS FRANC/U.S. DOLLAR: The dollar is still acting weaker versus the SWF than the DMK. Still key resistance at 1.4080-4100 and stronger at 1.4150-4200. Near-term support at 1.4000. Traders are 25% short at 1.4287-4321, stop at 1.4133.

The dollar continued to push to the upside Wednesday, closing above 127. New rally highs were made, but once again the dollar has been hit early Thursday as it has plunged to 126.20. There is further support in the 125.50-126 yen/dollar area. Most of the daily studies have not confirmed the recent highs, but they are still positive overall. The yen crosses are also starting to look a bit more toppy and a lower close Thursday could complete a near-term top.

Summary–Traders are 25% long at 124.77-125.44, stop at 125.17.

STERLING/YEN: The STG/yen surged to the 215.50 level, but has corrected sharply to the 213 area. A break below 212.50-80 will be negative. Traders are 25% long at 200-200.54, stop at 212.33.

SWISS FRANC/YEN: The cross tested the 91, but is trading below 89 in early Asian trading. A break of the uptrend, will confirm the divergence. Traders are 25% long at 84.40-76, stop now at 89.66.

CANADIAN DOLLAR: The dollar still acts positive with resistance now at 1.4200. Traders are 25% long at 1.3992-4026, stop at 1.4117.

The STG has dropped further to the support at 1.6850 which appears to be holding. In terms of price and time the correction should be about over, but a higher daily close is needed to confirm. A further rally is needed before a top could be completed. Traders were 25% long at 1.6822-65, stopped out at 1.6867.

STERLING/DEUTSCHEMARK: The cross is still locked in its trading range of the past few days. Near-term resistance at 2.9350-9400 and a breakout above this level will signal a much stronger rally. Traders are 25% long at 2.9240-9300, stop at 2.9135.

STERLING/SWISS FRANC: The STG/SWF still needs to move through the resistance at 2.4000 to turn the short-term trend positive.

DECEMBER TREASURY BONDS: The bonds moved through the resistance at 11902 and hit 11916 before turning lower. A rally to 120+ is likely over the near term. Traders are 25% long at 11712- 23, stop at 11728. Added 25% long at 11806-12, stop at 11817.

U.S. STOCK MARKET: The S&P futures held the 936 level and the closed strong. A rally to the 965-970 area does look likely with 980 also possible.

November 19, 1997Thomas E. Aspray

APM Asset Management

P.O. Box 15366, Little Rock, Arkansas

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