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

Moving Averages–Positive–5-day 972.80, 20-day 948.99; positive–4-day 977.27, 9-day 965.56, 18-day 950.34; 50-day 952.95.

Oscillators–RSI 64%, stochastic 81/83, MACD 8.05/4.06.

Resistance–992.05-992.25 *** key daily resistance/contract high (10-07-97). Support–967.70-967.90 ** key daily support.

Technical Indicators–The market is in a large, trendless congestion pattern. The market remains short-term overbought and susceptible to an intraweek move lower. Bearish divergence between price, and weekly/monthly momentum indicators.

Viewpoint–The major uptrend appears to be in the process of resuming, despite the daily chart being in the midst of a congestion pattern. A close above the 962.00 area today would help to confirm that the major uptrend is indeed resuming. Daily market momentum remains up today above minor support at the 969.00 level. The contract high (resistance) at 992.25 combined with strong resistance in daily momentum indicators warns of an impending downside correction (next week?).

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

Moving Averages–Positive–5-day 119.05, 20-day 118.17; positive–4-day 119.05, 9-day 119.01, 18-day 118.21; 50-day 117.00.

Oscillators–RSI 65%, stochastic 69/74, MACD 0.65/0.70.

Resistance–119.19-119.22 * key daily resistance. Support–118.28-119.01 ** key daily support.

Technical Indicators–Bearish divergence between price and daily momentum indicators. Bullish divergence between daily NOB spread and momentum indicators (bearish bonds). Bearish key reversal day yesterday. The market remains technically overbought.

Viewpoint–Longs are now advised to stand aside on a break below key daily support (119.01-118.28) today as more and more potentially bearish technical bias is becoming apparent. In analysis of the daily chart this week. From a longer-term perspective, the major daily, upside, weekly and monthly trends remain up, and my minimum upside objective for these uptrends is at the 127.00 level. For now, however, a downside correction appears likely before the uptrend continues.

December 5, 1997 John J. Kosar

Greenwich Natwest Futures, Inc.

311 S. Wacker, Chicago, Illinois

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