Consensus National Futures and Financial On Line Index
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TECHNICAL DATA MARKET REVIEW
Interest Rates
MARCH BONDS: March bonds continue to establish new contract highs, reaching 120- 20 on December 15, and currently trading at 119-31. While the daily studies have yet to confirm the recent strength, the long-term picture remains very bullish, and new longs are recommended on weakness against the September 11 trendline at 118-10. The daily MACD and stochastic oscillators have not set new highs with price, signaling a potential bearish divergence. However, the weekly and monthly charts are decidedly bullish, as ADX continues to uptick after identifying a new bull trend from below 15. While near-term weakness my prevail, we look for the contract to test the January 1996 high (nearest) to 121-28 to 122-04.
MARCH EURODOLLARS: March Euros are holing onto recent gains following the upside break of the October 28 trendline on December 11, currently trading at 94.18. This consolidation is creating a bull flag on the daily charts, and with the daily MACD oscillator crossing above the zero line, we anticipate a break-out to the upside. Look to buy against the bottom of the flag at 94.14, or a break to new highs above 94.21. The measured move targets new relative highs to 94.32. Stop below 94.09.
Commodities
FEBRUARY GOLD: February gold is threatening the October 1 trendline at 292.9, currently trading at 292.8. With the daily MACD and stochastic oscillators generating buy signals, we look to go long on a break above 293.0. Target the 38% of the October 1 high to the December 9 low at 312.8 with stops below 283.0.
JANUARY CRUDE OIL: January crude made a break above the November 14 trendline at 18.14 on December 16, currently trading at 18.28. We remain bullish as both the daily MACD and stochastic oscillators continue to climb out of oversold territory. Target the 20-day moving average at 18.83, and then the October 6 descending trendline at 20.22. Stop on a break to new lows below 18.05.
MARCH WHEAT: March wheat fell apart to 340.6 on December 15, putting us on the sidelines. The daily MACD and stochastic studies have returned to the bearish camp, and the outlook will remain bearish below the October 22 trendline at 360.4. Next support lies at the June 23 high (nearest) at 335.4.
MARCH CORN: March corn also got whacked this week, reaching 271.0 on December 15, and is currently trading at 271.4. We give up on our bullish bias as daily ADX has upticked from the low trend-ready level of 10, its lowest levels since late September. Therefore, we look to sell against the 20-day moving average at 279.2 with targets at the October 22 channel bottom at 266.0. Stop on a break above the channel top at 281.6.
JANUARY SOYBEANS: January beans continue to establish a pattern of lower highs and lower lows, trading below the October 30 low of 687.0, and looking to fill the October 9 gap to 679.4. The daily MACD oscillator has crossed below the zero line, indicating that momentum is accelerating to the downside. New shorts are recommended against 705.4 with stops above the November 11 trendline at 709.4.
Dollar
MARCH JAPANESE YEN: March yen rallied this week, reaching 8067 on December 17 and currently trading at 7903. The daily studies continue to climb after generating buy signals last week, and the fact that the contract is holding above the 20-day moving average at 7890 is constructive. While further gains are expected in the coming week, we look to sell against the July 7 trendline at 8300.
MARCH DEUTSCHEMARK: The D-mark continues to trade sideways following the break above the November 7 descending trendline at 5677, currently trading at 5673. The daily stochastic and MACD oscillators maintain a bullish bias, but the contract needs to hold above the 20-day moving average at 5685 to see further upside. Target 5800 with stops below the December 16 low of 5630.
MARCH BRITISH POUND: The pound established new lows of 16202 on December 16, but has since rallied to 16520 and is facing a critical juncture. Daily stochastics have crossed bullishly, and the contract is approaching the November 12 trendline at 16604. We look to sell the first test of this resistance, but will be quick to reverse on a break above 16610.
MARCH CANADIAN DOLLAR: The Canadian Dollar continues to come under pressure despite an additional 50 basis point hike by the BOC on December 12. While this temporary fix resulted in a quick rally to 7106, the contract has since drifted back to 7040. The daily chart remains bullish, but the weekly and monthly studies are very concerning, and anticipate further weakness into 1998. We will cautiously play the long side against 7024 with targets at 7037 then 7096.
Stocks
MARCH S&P 500: March S&Ps maintain a pattern of higher highs and higher lows off the October 28 low of 854.40, but remain under pressure. Both the daily MACD and stochastic studies are clearly negative, and the weekly indicators are showing bearish divergences. While another probe to new highs is not out of the question into the New Year, we are becoming increasingly defensive on further strength.
December 18, 1997 Roman I. Dutkewych
Technical Data
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Consensus National Futures and Financial On Line Index
Hosted by:
One Crossroads Place
610 West Maple Ave, Suite WWW
Independence, MO 64050
(816) 252-4080
sysop@kcmo.com
