wmeubank@ocp.kcmo.com
FISHBACK MANAGEMENT & RESEARCH
P.O. Box 23798, Lexington, Kentucky
(September 24, 1997) FINANCIAL INSTRUMENTS: SEPTEMBER BOND FUTURES–Our bond market model continues to be bullish and has even improved further. The main reason for the improvement is that the trend in interest rates, both short term and long term, is firmly in bullish mode. Also positive is the yield curve, as well as the positive trend in interest sensitive stocks. The dismal performance of gold is also providing a bullish backdrop, as the yellow metal and related mining stocks are all in an entrenched downtrend. The only thing that isn't bullish is sentiment. Sentiment on bonds is neutral–neither bullish nor bearish. With every indicator except one bullish and none bearish, bonds are likely headed higher still.
RECOMMENDATION–We're going to try to implement the same trade as last week. But this week, because of the better probabilities, our minimum credit is less. Sell the November 113 put (settle, 11/64) and buy the November 111 put (settle, 2/64) for a minimum credit of 14/64 or better. If you can't enter the trade by Tuesday's close, cancel your order and wait until further instructions.
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