Prepared by INSIIDE Track Trading

One of the cycle principles that I have attempted to convey is that 3600 in time will often represent an event or mindset coming 1800 during that same period. This is why I believed that July-November 1997 would represent the peak in investor euphoria since it was 360 years from the depths of despair following the tulip bulb collapse of 1637, 2- and 3- cycles of 360 months from the end of 35-40% DJIA declines in 1907 and 1937, and numerous cycles of 360 weeks and days from pessimism following the 1987, 1989, 1990 and 1994 “corrections.” Time had moved in 3600 increments, while sentiment had come 1800. A top was imminent.

The same principle applies to external events, one particular one to which I would like to direct our focus. December 1997 through March 1998 represents 360 weeks (and/or 7 cycles of 360 days) since the U.S. and the world reveled in its own success of defeating a then-overrated enemy.

January 15/16, 1991 was the beginning of euphoria for the western world as a massive 39-day air strike campaign began on Iraq. This was followed by a much-anticipated and somewhat anxious ground attack that resulted in massive surrenders by the once-feared Iraqi army (3rd largest standing army in the world as it was once termed).

Unfortunately, as least for George Bush, this euphoria–like everything else in the western world's “microwave generation”–was short-lived and was replaced by other more expedient concerns and fears. The world leaders of 1990-91 have entered the history books, while the leader of Iraq remains in power.

The point of this is that sentiment has come 180 degrees. In 1990, there was fear and trepidation, worries about tens of thousands of our armed forces returning in body bags and other forms of despair. The result was just the opposite. Now, the “international community” is cocky and is ready to use Saddam Hussein as a punching bag, a political distraction, and a vehicle to increase popularity.

CNN polls of the nation found that at least a 3/1 ratio of responding Americans favor more military action against Iraq. World leaders are forging a new coalition...and Iraq is waiting. This time they have one major factor in their favor...

The rest of the Arab world senses little threat from Saddam expelling American investigators. Most of them actually like it. It is not as if Saddam has just violated the sovereignty of one of their oil-producing brothers and could be bent on attacking them next. The situation is entirely different from 1990/91 when even the Arabs united with the western world.

There is another enormous difference...and it will end up being the telling and turning distinction. In 1990, even under fierce Scud missile attack from Iraq, Israel was pressured into remaining passive and not saying anything that would divide the Arab/Western alliance.

Contrary to Israel's notoriously strong position and response to attacks of this nature, they remained silent through much of the Gulf War at the insistence of Bush, Baker, and other coalition organizers.

However, this time is already different. On November 14, within hours after the U.S. and British had responded to Iraq's expulsion of Americans, Israel announced that it too would respond with military action if Iraq escalated tension. More than anything, this demonstrates the difference of philosophy between Benjamin Netanyahu's belief in peace through strength, similar to Ronald Reagan's approach towards the USSR in the '80's, rather than peace through land giveaways.

Is it just a giant coincidence that this has all taken place since October 1/2–the beginning of what should be one of the most momentous years for the Middle East (basis the Jewish calendar) in modern history? Is it coincidence that Israel has quickly entered the fray leading into 1998 when I have projected the ultimate deterioration of the peace process?

Most importantly, is it coincidence that all these developments are evolving as a year-long stock index correction and gold bull market are expected to unfold? Or, are we already seeing the seeds of what will drive these markets opposite the direction they have headed for over a decade? I think this is more likely the case.

Referring back to the September 1995 Special Report: The Cycle of Time II, veteran readers might also recall that 1998 is when I believe the governments of Egypt and Saudi Arabia will likely fall. The recent terrorism at the pyramids, in an attempt to destabilize the Egyptian government, could be the start of another devastating campaign which would ultimately result in this.

The other alternative, which has recently seen supporting evidence, is that these countries will see a psychological change of leadership, rather than a physical one. In recent months, Egypt's Hosni Mubarak has become the biggest supporter of Yasser Arafat and seems to be revealing his true motivation: eliminating Israel bit by bit.

Since mid-November, Israel has seen renewed attacks, offered concessions on the West Bank and had their own military recommend withdrawal from S. Lebanon. The problem with all this is that once the Arabs sense fear or retrenching, they are likely to go in for the kill. 1998 is destined to be a momentous year in the Middle East!

Last month, I began to describe the reality and the true context of “global warming.” Assuming that temperatures actually have risen the last 50 years, which may not be that accurate of an assumption, it is similar to temperatures rising in April and May versus January and February. There are much larger seasons in the earth's climate than simply the 91-day seasons to which we are accustomed and most familiar.

In other words, the conclusion that temperatures have slightly risen could be accurate, just as the same conclusion could be reached in August of any given year in the Northern Hemisphere. The problem is when this progression is then extrapolated on a linear basis and used to force an agenda that would otherwise be laughed out of existence. Life is more cyclical than linear.

Getting back to the basis for my own conclusions, climate studies should start from the largest perspective and then work down. As Raymond Wheeler methodically documents in his papers, there is a 1,000 year cycle of alternating seasons, which has ushered in major civilization changes but is not due another dramatic shakeup for about 500 more years (see The Raymond H. Wheeler Papers: Climate–The Key to Understanding Business Cycles edited by Michael Zahorchak).

Wheeler also describes a 500-year cycle which relates remarkably to the current discussion. In this book about his work and papers, it states:

“Subsequently temperatures warmed suddenly. The 1000s were so warm that trees grew in Greenland...Vikings crossed the Atlantic. One of the most severe hot droughts in history occurred in the 1130s.

The next 500-year period terminated in 1475. Subsequently, temperatures warmed up again...Events of great importance occur every 500 years.

...The 500-year period beginning in 1475 is drawing to a close. We are witnessing many of the same types of events that have occurred under similar circumstances with almost clocklike regularity five times before in history...”

In other words, when Raymond Wheeler presented this argument over 40 years ago, he expected similar events to occur in the end of the twentieth century to those sudden warming periods which followed each 500- year cycle of cold-dry, warm-wet, hot-dry and cold-wet maxima documented through five previous occurrences.

He went on to discuss the “perhaps most important cycle in this hierarchy...the 100-year cycle.” He describes a pattern of 35- 55 year periods between shorter rhythms of temperature and business cycle changes and a more consistent cycle of 45-46 years between major temperature changes (reinforcing Gann's theory of geometric time).

Eloquently, his papers describe the exact phenomenon most widely recognized today as “fractals.” To quote from the same book, “The picture is that of rhythms within rhythms.”

Sound familiar? Two additional quotes are prolific and should be recognized by every reader. This work points out that both the 100- and 500-year cycles were due to change around 1975- 1985, when at least two new cycles would begin. Regarding the 500- year cycle (halves of the 1,000-year cycle), this book concludes:

“At each termination of this cycle, a distinct historical epoch has ended and another began...The 1,000-year cycle breaks down into halves, with both resulting 500-year rhythms ending in exceptionally cold and dry phases. Each 500-year cycle termination throughout history has also marked significant upheavals or turning points in society.”

It goes on to describe the critical 100-year cycle in this way:

“Nothing of any consequence in the way of human affairs has escaped the influence of the 100-year climatic cycle...In all these rhythms, the same pattern prevails...”

We will examine more of Wheeler's fascinating and prescient work in future issues, but I want to revisit the concept of “global warming.”

Is this phenomenon an actual, reversible event or the fabrication of an overimaginative mind with an agenda to push? Can mankind actually “save the planet” if it is truly overheating?

Instead of removing population chunks of the globe, as many ultra-environmentalists and the communique following the grand Rio De Janeiro summit of the early-'90's proposed, maybe a lobotomy is more in order. It is more a problem of lobal overheating than global overheating.

But, little of this matters as the Kyoto summit on global warming begins this week. It will be interesting to see what America is forced to give up in freedoms and prosperity and what effect this will ultimately have on our markets.

More important to traders is the summation quote regarding this subject in last month's issue. Recent action in gold, currencies and the stock indices makes it even more credible and points to significant reversals in the coming weeks. To review this analysis:

“December 1997 is likely to mark another critical turning point in both the markets and the world. The global-warming summit and specific market cycles are only two of the events for which to be prepared.”

Keep your eyes on gold, the S&P and the dollar!

As the Nikkei stands looking over a cliff and into the abyss, the other major world markets are still shrugging this off as if it means nothing. An avalanche has begun throughout Asia and is the first signs of a perfect fulfillment of the Cycle of 360. The most recent symbol of prosperity, and the markets speculated to lead into the next century, have been the Asian Tigers. These Tigers are beginning to look like pussycats and could soon be treated like strays.

Just as the Tulip Bulb market of 1634-1637 went parabolic and then collapsed, so too have many of the Asian stock markets...and the end is now in sight. South Korea is the latest in the stream of currency devaluations leading to market collapses. Latin America is close behind and it is absurd to expect that Europe and the U.S. will not suffer serious consequences as a result.

The Nikkei gave its long-awaited sell signal on July 25th and needed a weekly close below 17,000 to usher in the collapse of the Japanese economy and create turmoil in the international financial markets. This came at the same time the Hang Seng collapsed and the full ramifications are yet to be felt.

The month of December is often a month to square up books and let the markets drift into the December 31st close. December 1997 could be different as a DJIA top is expected between December 1-9th, likely around 8180-8200, and a dollar top is also close at hand.

The Deutschemark is nearing critical intermediate support and should hold around 55.56-55.90/DMZ, which could spur the next decline in the dollar...and ultimately the European Bourses as well as the U.S. stock market.

I typically avoid inter-market correlations and treat each market on its own. This is still the case, but there has been such a close correlation between currency movement and equity market collapses lately that the biggest one ($$) should be closely monitored.

As I stated last month, “Many of the international markets could now see a bounce into early-December, though mid-November does hold the potential for an intervening decline.” We have now seen this bounce and the time for the start of a “c” leg decline is at hand. This is almost always the most dynamic and most devastating wave, so hold on tight.

I will be watching the December 1st lows in each of these indices as meaningful support in the early part of the month. A daily close below this level will signal an intermediate short in whichever markets it occurs.

Even more important will be the lows of the coming week, December 1-5th. A daily close, and particularly a subsequent weekly close, below these lows will confirm the beginning of the end for the next several months.

Also needed for confirmation will be weekly closes below 15,500 in the Nikkei, below 2650 in the CAC-40, below 4530 in the FTSE and below 3700 in the DAX.

To recap from last month:

“Most cycles and indicators lead me to believe we will see a quick rally into November 4/5th with the likelihood of the S&P reaching a minimum of 944.00-946.00/SPZ and a maximum of 954.50/SPZ.”

A strategy for capitalizing on this bounce was outlined and advised for INSIIDE Track traders. To repeat:

“...Aggressive and intermediate traders can buy November S+P 900-910 put options if/when the December S&P tests (or spikes above) 944.00-946.00. If buying multiple options, stagger entry from 944.00-954.50/SPZ and risk a daily close above 966.50 for now. This risk should be able to be substantially reduced by mid-week” (11/01/97 Weekly Re-Lay)

The S&P rallied to 955.00/SPZ, fulfilling the maximum upside target with near precision, and abruptly turned lower. However, certain support levels could not be broken and traders were advised to dramatically reign in trailing profit stops–which were hit on the 11/13 rebound through 916.00.

The week of november 14th ended with a weekly 2 close reversal higher, projecting an additional 1-3 weeks of strength. This spurred projections for another 30-34.00 point rally to 962-965.00 into November 17-19th, which was fulfilled and followed by this analysis from the November 22nd Weekly Re- Lay:

“For now, last week's 2 close reversal higher remains in force and could force higher prices into early December. December 8/9th is a critical cycle which will be examined further after the coming week's trading...

947-950.00/SPZ is an important intra-week level which is likely to be seen. The question is whether a test of this level will be short-term bullish or bearish. This will depend on whether a pullback is seen immediately (bullish) or whether a spike higher and reversal intervenes (bearish).

...If the market is going to trade higher into early- December, it is likely to pull back for the next week and then give a final surge in the first 7-10 days of the new month.”

What did the S&P do? The S&P immediately plummeted to 947.00/SPZ, a drop of nearly 23.00 points in one day, and closed at 949.80. The following day, it spiked to 945.00/SPZ but quickly reversed higher–giving every facet of the bullish scenario and forecasting another surge into early December, possibly as late as the 8/9th.

The most recent analysis details further why the first week of December is set to be a top...

“Monday's (11/24) trading fulfilled most of this, providing the anticipated sharp retracement, a minor cyclic low and the projected test of 947- 950.00/SPZ.

This level was tested before a final surge making it a more bullish test short term, coinciding with the weekly 2 close reversal higher and daily up-trend which remained intact. The problem is that little follow-through has been seen in the 3 days since this level was tested. An additional bearish factor is the key reversal higher on Tuesday, which lacks confirmation with a 2 close reversal.

And, the kicker...This past week set up a **kiss of death signal, which usually indicates the end of a correction and the resumption of the prevailing trend. Since the weekly trend is down, it is the upward correction which should be terminating at any time. The weekly 2 close reversal higher is also culminating next week.

The first sign of weakness will be a daily close below 946.80/SPZ and/or a daily close below Monday's low on any day, thereafter. If either event takes place, traders should be selling a subsequent bounce looking for a breakdown to last into December 29th. The most bullish sequence would unfold if 946.80 is tested Monday, before any additional rebound, and spurs a reversal higher...” (11/29/97 Weekly Re-Lay)

So, several indicators warn that this rally is culminating and should see a final surge into December 1-5th, with an outside chance of a final spike and reversal on December 8th or 9th. Based on yesterday's monthly closes, the SPR for December comes in at 989.15/SPZ and 8088/DJIA. These will be the first levels to watch for a potential top.

The second levels, which would entail another higher high in the S&P and lower high in the DJIA, are around 1006.00/SPZ and 8185- 8200/DJIA. Once Monday's low is established, use it to calculate the intra-month preliminary LLR as a reinforcement to the above resistance levels. If they align in the same vicinity, this will add to the argument for a top in early-December.

A quick spike and reversal lower from these levels would be one of the strongest confirmations that a major top is unfolding, which should give way to a 30-40% correction in 1998. So, intermediate and long-term traders can be looking to buy S&P put options on a spike up to 8180-8200/DJIA, risking a daily close above 8300. The premiums are pretty steep right now, so look for an option which fits your specific risk parameters and which will offer at least two months of time.

Bonds have struggled to make any additional gains and could be setting a top a little shy of intra- year expectations. However, they have also made selling attempts very difficult in recent weeks. This could only mean one thing...an ascending wedge pattern.

In an ascending wedge, also known as a bear wedge or as a diagonal triangle to Elliotticians, the angle of the trendline connecting each subsequent high, is far less steep than the angle of the trendline connecting each progressive higher low.

Not only have the highs made a perfect 3-point trendline, but they have also represented a perfect example of Hadik's Cycle Progression. The rally from 9/11/97 through 10/03/97 took 16 trading days. 16 trading days later, a second high was set on 10/28/97. 16 trading days after this high, another peak was set on 11/20/97 from which a 16 day decline is likely.

If the 11/20/97 high of 119-18 is not taken out on a closing basis, bonds should decline into December 15th. The first sign of this pattern emerging will be a daily close below the ascending trendline, now at about 118-25 with the bonds closing today at 119-06/USZ (119- 01/USH).

Weekly Re-Lay traders were advised to buy January 117/118 puts this past Monday (11/24) and INSIIDE Track traders should sell a daily close below the 12/01 low, as long as it has not already dropped more than 16-24 ticks below this low. Risk a daily close above the 12/01 high and take profits at 115- 12/USH.

If I am wrong on the distinction of the 12/15 cycle, and it produces a lower high following a sharp drop and quick rebound, the ensuing 16 trading days should be even more bearish and represent a 3+ week decline into January 8th/9th. The December 11th hotline will update this.

Finally, if a daily close above 119- 18/USH does occur, it should give the necessary impetus for bonds to surge one last time and test their 1997 objective of 121-00. This would eliminate some of the bearish tone surrounding the ascending/bear wedge, but would still allow room for a quick correction thereafter.

Until this happens, the near term outlook is turning bearish. Keep in mind that all bonds need to do the first week of December is spike above 119-05/USH and close the week below 119-01/USH and it will give a weekly 2 close reversal sell signal. Intermediate cycles align during the first two full weeks of January, so next week's action will give some solid clues as to what to expect leading into 1998.

Silver treated traders to an excellent long trade which was finally stopped out this past Tuesday (11/25). Gold, on the other hand, could not muster any strength as long term cycles are clutching it like a ball and chain.

3600 cycles from the 1987 high, 1993 low and 1995 low align over the next 4-6 weeks and should usher in a major bottom. I will be updating this throughout the month. When gold bounced into the critical early-October cycles, the possibility of a low waiting until January appeared but was still not convincing.

It took a daily close below the key 308.0 downside objective to indicate that the December/January cycles were in control and could drag the market as low as 280-285.0. At a time when the fundamentals appear to be dire for gold, traders should go back and read the lead article in the October 1997 INSIIDE Track (which was just updated for the December issue of the Bull & Bear Financial Report).

I still contend, as I have throughout this entire year, that Gold would not see the heaviest burden lifted until European Union had been decided and Europe's central banks no longer had such a strong, and urgent, incentive to continually sell gold. This is still the case, and could allow gold to catapult higher once this weight is lifted off its back. The fact that silver has already confirmed a major low, and is diverging from gold, is another indication that a bottom is unfolding.

For now, traders should watch the first day of December as an important intra-month range. A daily close beyond that range, higher or lower, will indicate which way these markets want to trade into mid-month and potentially into the end of December and end of 1997.

January soybeans fulfilled almost everything written in last month's issue. To repeat,

“Soybeans recently gave a weekly 2 close reversal buy signal which was detailed in the 10/25 hotline. This signal should lead to higher prices into mid-month and traders were told to buy Jan. 725 or 750 call options on a pullback to 695-697.0/SF following this signal. (Weekly Re-Lay traders were also advised to buy the futures at this price.)

This trade was triggered on October 28-30th and should give way to a sharp rally in the first half of November (733/SF is resistance during the first week of November and 750/SF is the first target). Take 1/4-1/3 of profits if 750/SF is tested by mid-month and raise sell stops to a daily close below the November 3rd low beginning November 4th...” (11/03/97 INSIIDE Track)

January beans reached 733 on November 7th, then shot up to test 750 the following week, setting an intra- month high at 748.0/SF. By November 14, they had turned lower and given a weekly key reversal down, enough to confirm that the high for November was intact.

Traders should have exited longs on the test of 750 and subsequent drop through trailing profit-stops and can now be looking to enter on the long side again. The best support comes in around 695-697 in both the January and March contracts, so traders should buy 695-697/SH and risk a daily close below 681.0/SH.

The mark rallied early in the month, altering the perspective on the ensuing decline. As conveyed throughout the month, the mark was projected to test 56.24-56.55/DMZ, a level which is now at hand. The weekly trend is yet to give even one neutral signal and remains up for the time being.

As stated in the hotlines, cycles and reversal patterns indicated that a decline into early-December was expected and would likely culminate with the test of support. If 56.24/DMZ is tested anytime in early-December, traders should watch for signs of an upward reversal.

I expect this action to unfold in one of two ways. Either the low is set on Monday/Tuesday, between 55.95-56.35, and a daily close above the 12/01 high immediately ensues or this market trades down to test monthly support and intermediate wave/retracement levels at 55.50-55.75 before reversing higher. This level, too, could be seen before the end of the first week of December.

Last month's analysis that a final spike lower in the yen was needed to wipe out premature bulls was accurate, but to an even greater extent than I had anticipated. As a result, any attempts at bottom-picking were stopped out and should be postponed for the moment.

This decline has followed-through and taken out the April lows. This new low confirms a fifth wave decline which could give way to a sharp rebound at any time. However, it will take a weekly close above 79.49/JYZ before this is possible. Until this occurs, or an form of weekly reversal higher unfolds, the trend is down and should be respected.

After completing a textbook 5 wave advance from August 1996 through august 1997 (3600 in time and 1800 in sentiment), the dollar index has completed an “a” wave down and is tracing out a “b” wave rebound. If this rebound peaks during the first week of December, it will set up a cyclic progression which forecasts a sharp decline into the week of March 13, 1998.

A weekly close below 94.65/DX is needed to confirm this scenario and would usher in projections for a decline to 87.86-89.05 and potentially down to 85.50-85.95 basis the March contract. In the interim, a weekly close above 97.94/ DXZ should not occur.

If the dollar does turn back down, this could be the impetus for a stock market decline. Or, the two may simply react hand-in-hand. I will be watching both complexes for the first signs of another reversal lower and will convey it as soon as it is recognized.

As I watch the actions of Saddam Hussein, I am having more and more trouble dismissing the theory conveyed to me by a subscriber a few months ago. I alluded to this last month and was able to locate the complete text of this article and want to convey the more salient points of it.

In short, the author's tongue in cheek conjecture is that Saddam is manipulating the oil markets so that he can profit by speculating on what he is about to say or do–whether confrontational or conciliatory.

The article is entitled “Pulp Fiction” by Thomas L. Friedman and here are some of the excerpts...

“MEMO TO: My Literary Agent. Dear Agent; You recall last summer I sent you a proposal for a novel about how Saddam Hussein was deftly using his relationship with the U.N. to influence oil prices. Every time Saddam feigned cooperation with the U.N...prices went down. Every time Saddam stiffed the U.N...prices went up. Saddam was doing all of this deliberately because through front companies he was actually buying and selling oil futures, and he was a winner every time...

Well, He's baaaaaaack. Saddam is at it again, and I have a great idea for a sequel novel, “Scuds and Scams: How to Rebuild Your Army With Oil Futures.”

Mr. Friedman goes on to discuss how Saddam could be using futures and even options on futures to capitalize on the market gyrations he causes with his actions, many of which have come at the perfect time to have a synergistic effect with seasonal supply/demand factors. Mr. Friedman's second part of this scenario is equally intriguing as described below:

“Everyone looks at Saddam and says: `What a fool'...But he's just toying with the U.S. and U.N.. He's not interested in selling oil to benefit his people. He's only interested in benefiting himself and the army that he needs to protect him from the people...none of the money comes to him–but by manipulating the U.N. program, and provoking the U.S. and U.N. into stopping and starting his oil sales...he can make a killing in oil futures for his own account.

In my novel, Saddam also strikes a deal with an Asian nation (North Korea? China?) under which it agrees to secretly repair some of his tanks and he pays with insider tips on the oil futures market. (Don't laugh, the Chinese just told the Kuwaitis that if Kuwait wanted China to vote for a renewal of the U.N. sanctions regime on Iraq the Kuwaitis better think about buying Chinese howitzers instead of the Western ones.)

In my novel, the CIA finally catches onto Saddam. As a result, President Clinton asks Saudi Arabia to declare that it will increase or decrease its own oil production to blunt whatever Saddam does. But the President is too late. While he was ignoring the Middle East, Saddam forged a quiet rapprochement with Saudi Arabia, Iran and Syria, and none of them will do America's bidding. (Don't laugh, Iraq today opened its border with Iran for the first time since 1980...)

Well, as I said before, it just a novel idea I had. Nothing like this actually could be happening in the real world -- could it?” (Foreign Affairs/By Thomas L. Friedman)

It makes you think just how much of it could be true. Saddam gains nothing by adhering to U.N. oil sales for supplies deals, so why should he bend over backwards to appease the West. Instead, he can make the U.S. out to be the villain, as continues to occur on a weekly basis, and turn more of his people and his neighbors against the West.

In the end, Saddam looks like a martyr to his people, and the U.S./U.N. look more and more like the Great Satan from their vantage point. Sooner of later, Saddam's actions will cause grave consequences for himself, the West, or both. When it does, get ready for the price of crude to rise exponentially.

In the interim, crude, heating oil and natural gas have each taken out intermediate support levels and are approaching long-term support. Crude tested a monthly HLS, so a major low is due anytime. Natural gas has powerful support around 2.400/NGF which should hold. Heating oil is unfolding in a type of expanding triangle, where successive new highs are met by subsequent lower lows and so on and so on. A daily close above 55.50/HOF is needed to confirm a buy signal from this pattern.

The month of December ushers in the next phase of the projected 1997/98 scenario in which the stock indices ultimately correct by 30-40%, the dollar is dealt a serious blow, and gold/silver begin a strong rally...

Since most fundamental factors point to a deflationary scenario, it will take something out of left field to usher in an inflationary outlook. Two things come to mind: the Middle East and earth disruptions.

The important point is to not become too convinced that gold could never rally, or stocks will never fall, as so many economists portray. Remember, life is cyclical more than it is linear. Ardent fundamentalists are notorious, when whatever event does materialize, for the oft-quoted rationalization, “nobody could have expected that.”

They are right, if everyone is extrapolating all current data on a linear basis, just as the environmentalists are doing with global warming. But, if the markets only go one way, then why did the 1987 “blip” not take us down to 200/DJIA, and why did the 1980's not see $2,000 gold and more? Why? Because the markets are also cyclical, not linear.

In short, December 1997/January 1998 will be a dangerous period based on market cycles, Middle East cycles, Asian and western North American earth cycles and even space exploration cycles.

Some of this may sound esoteric. The point is that, for some reason, numerous cycles stemming from previous disasters align in the next two months. Mid-to-late January is the largest convergence of these cycles, so there may still be some time to prepare for whatever event could unsettle the markets.

Cycles are a warning sign, or a yellow flag. Not every cycle is fulfilled with perfect repetition So, my advise is simply to take a little added caution, trade a little more conservatively, and monitor a little more acutely any potential signs of danger. Market movement usually precedes events like this, but the signals are often subtle. So, be alert!

December 1, 1997Eric S. Hadik, Editor

INSIIDE Track Trading

P.O. Box 2252, Naperville, Illinois

Consensus National Futures and Financial On Line Index

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