Inflation continues to run at low levels, even as the U.S. economy continues to operate at a vigorous rate, and with a very tight labor market. The consumer price index for October rose a slim .02%, as did the core rate. As we see it, inflation may very well continue to trend lower as commodity and oil prices move downward. We see demand for energy products falling in Asia, due to weaker economic activity. We also believe that deflationary pressures from Southeast Asia will help dampen global inflation.

STOCKS: The stock market's hefty rise on Monday, November 17, failed to reverse our technical indicators. The failure of the Dow to close above the 7720 level signals that investors are still wary. Not withstanding a very sound U.S. economic environment, the stock market never likes uncertainties. We believe the market needs to stage a strong close above 7720 before the technical outlook improves. We suspect there is still some time left for the market to reach this level, before forming a short-term top. We think a break out above the 7720 level would indicate a strong year-end rally.

GOLD: No change, market sentiment trying to improve but with crude oil prices moving under $20 and no new developments in Asia, we see little hope for the gold market. We think it's a matter of time before the $300 level is broken.

DOLLAR: No change!

BONDS: We continue to look for long-term rates to move today the 6% in the short term. We see the market taking a quick dip under 6% and trade between 6-6¼% for the balance of the year!

November 20, 1997Peter Cardillo

Westfalia Investments, Inc.

90 West Street, New York, New York

Technical Corner Index

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FORTUCAST | G.I.S., WINTREND SYSTEM
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THE WEEKLY RE-LAY
WESTFALIA INVESTMENTS

Consensus National Futures and Financial On Line Index

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