The markets are reported as of the close Wednesday.

The dollar, as expected on the weekend report, was hit with some profit taking today. Comments from Germany coincided with the weak technical readings on the dollar declined versus both the DMK and SWF. A further correction is possible over the next day or two before the dollar's uptrend resumes. A higher close on Thursday will indicate the correction is over already. With the unemployment data Friday volatility is likely to remain high. The dollar was a bit lower also versus the yen, but the crosses closed higher. A further rally in the crosses should signal the start of a new uptrend.

DEUTSCHEMARK/U.S. DOLLAR: The dollar again tested the 1.7800 level buy then turned lower in early European trading. The stronger support at 1.7680-7700 has been reached. The short-term 38% retracement support is at 1.7630 with more important support at 1.7560-80. This should be the maximum downside for a further correction. Once the correction is over, the dollar should test the 50% resistance level at 1.7940-60. A rally above the 1.8000 DMK/$ is possible in the next few weeks.

Summary–Traders are 25% long at 1.7340-94, stop at 1.7470. Add 25% long at 1.7590-7655, same stop.

DEUTSCHEMARK/YEN: The cross closed higher today with next resistance in the 72.80-73 area. A strong move above this level. Traders go 25% long on a stop at 73.25 stop at 72.39.

The dollar's correction from Monday's highs at 129.35 has taken the dollar back to the 128.20 area. Still stronger support in the 127.50-80 area. Despite the correction the daily studies are still clearly positive and show no signs yet of a major top. There is talk of intervention by the BOJ at the 130 yen/$ level. If the dollar can move above 129.40 it could test the 130 level quickly. The hourly P&F chart shows a slight breakout above resistance.

The technical outlook for the yen crosses has improve with the higher close today, but a further rally is needed to confirm.

Summary–Traders are 25% long at 126.60-95, stop now at 127.67.

STERLING/YEN: The STG?yen is still stalled below the 217 level. When it is broken the dollar should rally to 218.50-219. Traders go 25% long at 217.17, stop at 216.33.

SWISS FRANC/YEN: The cross was able to hold the support at 89.60 and tested the 90 level in late trading. There is still further resistance at 90.30-40. A move through this level will be much more positive for the cross.

The STG dropped slightly below the 1.6800 level, but closed well above the days lows. It still appears to be bottoming, but a move through the 1.6850 level is needed to reassert the uptrend. Traders are 25% long at 1.6717-67, stop now at 1.6777.

STERLING/DEUTSCHEMARK: The cross has corrected steadily from the 3.000 level, but so far the support at 2.9740-80 appears to be holding. There is more important support in the 2.9660-9700 area. Initial resistance at 2.9850-9900. Traders go 25% long at 2.9717-74, stop at 2.9633.

STERLING/SWISS FRANC: The STG/SWF has again tested the good support at 2.4000. The daily studies are positive and do favor a further rally.

MARCH TREASURY BONDS: The daily technical studies are positive, but the risk of a sharper correction have increased. Traders are 25% long the December contract at 11712-23 and would close out now.

U.S. STOCK MARKET: The market was weak for most of the day but closed strong. The futures had a wide range and look ready to test the 790-800 level. No new recommendation.

December 4, 1997Thomas E. Aspray

APM Asset Management

P.O. Box 15366, Little Rock, Arkansas

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