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COMMODITY REVIEW AND OUTLOOK
195 Route 6A, Suite 6, Orleans, Massachusetts
(December 18, 1997) FINANCIAL INSTRUMENTS: BONDS–The improved outlook for Japan has the bonds a bit concerned that flight toquality buying may now be countered by selling if the yen maintains its gains. Low yields continue to wage war with flight to quality buying. A winner has yet to be declared. If the stock markets continue to unravel, U.S. bonds are the best game in town. Concerns regarding the possibility of Japanese sales continue to hang over the market. However, U.S. bonds offer an excellent guaranteed return that is higher than is available in Japan. I would suspect that non-performing assets, such as gold, used bank buildings, and securities firms would go first.
RESISTANCE–Resistance basis March lies near 120.12, 121.00, 121.20.
SUPPORT–Support basis March is near 119.27, 119.05, 118.19, 118.00, 117.15.
RECOMMENDATION–Bonds may be offering a two-sided opportunity for now. Aggressive traders might sell March bonds in the 120.08-120.12 area, and/or buy a dip to the mid-119.00's with stops of 16-32 ticks. Use 16-32 tick stops. Be alert for buying in the upper 119.20's. There is still the potential for a rally to the mid-122.00's. Traders should keep an eye on the world stock markets. All the guests may not have arrived at the party yet. There is still the potential for flight to quality buying sending the market to the 126.00's.
M. Steven Morgan
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