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COMMODITY REVIEW AND OUTLOOK
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(August 14, 1997) FINANCIAL INSTRUMENTS: BONDS–Short-covering and no bearish surprises helped the bonds recapture part of this week's losses. This market has had a good run, so we might see more of a good profit-taking break. A potentially major negative is the weekly chart, which is arguably a double top. Be careful. New-near term lows look more likely than highs.
RECOMMENDATION–Support near 112.09, the low 112.00's, and upper 111.20's, and the low 111.00's to the 110.20's has held thus far. I find myself questioning whether I will be saying that this time next week. Aggressive traders could sell rallies to the upper 113.00's, lower 114.00's. If conservative, hold out for the mid-114.00's. Use stops of 32 ticks. My bias is to the downside. Option traders should consider buying near the money puts on a good rally. Resistance may appear near 114.16, the low 114.00's to the upper 113.00's, and the 113.20's. There is still the potential for new highs, so be cautious. However, resistance as the 114.00's are approached appears substantial, and traders should be on the alert for a failure if the market can reach that level.
M. Steven Morgan
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Last updated on 08-15-97
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