IOM DECEMBER S&P 500 INDEX: Short-term trend up, long-term trend neutral.

Moving Averages–Positive–5-day 956.38, 20-day 937.34; positive–4-day 958.52, 9-day 947.35, 18-day 939.97; 50-day 951.71.

Oscillators–RSI 54%, stochastic 74/85, MACD 2.01/—1.62.

Resistance–970.80-971.00 *** key daily resistance. Support–946.25-946.45 * key daily support.

Technical Indicators–The market remains in a several-month trendless congestion pattern. Topping/declining daily oscillators warn of an impending intra-week move lower. Daily market momentum remains up above the 946.45 area today.

Viewpoint–My analysis continues to indicate that the market is in the midst of a several-month trendless congestion pattern. If this is the case, current short-term overbought conditions set up an ideal technical environment for an intra-week to weekly move lower to occur from this price area, and 971.11 resistance should not be penetrated to the upside. Downside penetration of 946.45 support is necessary to indicate that this potential downside correction is underway.

CBOT DECEMBER TREASURY BONDS: Short-term trend up, long-term trend up.

Moving Averages–Positive–5-day 119.03, 20-day 118.08; positive–4-day 119.01, 9-day 118.28, 18-day 118.13; 50-day 116.25.

Oscillators–RSI 63%, stochastic 68/74, MACD 0.72/0.72.

Resistance–119.16-119.18 ** key daily resistance/contract high (11-20-97). Support–118.16-118.21 ** key daily support.

Technical Indicators–Significantly declining open interest over the last two sessions (longs liquidating?). Possible bearish head-and-shoulders top pattern forming. Bearish divergence between price and daily, weekly and monthly momentum indicators.

Viewpoint–Although the market is near its contract and the major trends remain up, bearish divergence, recently declining open interest, technically overbought conditions, major resistance at the 118.31 area, and a possible bearish head and shoulders top all warn of an impending downside correction from this price area. Therefore, longs are advised to stand aside below key daily support (118.21-118.16) today as this would indicate that this correction has begun.

November 28, 1997John J. Kosar

Greenwich Natwest Futures, Inc.

311 S. Wacker, Chicago, Illinois

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