Comment from February 1994: The bull market has ended. The October 1993 high of 122-10 was the peak of the decade. My downside target during the next few years is 86-28.

The bear market that began in 1993 will be composed of a sell-off, a large correction and another sell-off to my ultimate target of 86-28. The first sell-off began in October '93 and ended in November '94 at 96-01. Then the large correction began and pushed the contract upward through

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1995. The correction ended in January '96 at 122-04 or 6 ticks below the October 1993 peak and the latter sell-off began. It will drop the T-bond in a line to 86-28 that will be slightly crooked due to pauses or corrections at long-term targets (of 104-24, 95-27, 93-02). The January to June '96 down wave dropped the market from 122-04 to 105-16. Then one of those corrections began and the T-bond zigzagged upward through the fall of '96. I shifted my long-term view back to bearish in late October. Comment from December 10: <169>Question two, did that (the December) sell-off mark the resumption of the multi-year bear market?<170> It is too early to know for sure, but I advise portfolio managers to stay short their benchmarks assuming a resumption has occurred. The T-bond has fallen six weeks. The last time that occurred (March-April 1994) was during the first sell-off of the multi-year bear market. The similarity of the price action provides more evidence the downtrend has resumed. My next long-term target remains 95-27 (8.20%). A close below 104-24 on a monthly basis will confirm the multi-year downtrend has resumed. I will remain a long-term bear until the front contract closes above 116-18 on a weekly basis.

Comment from March 17: USM closed out last week below 109-06 so another round of long liquidation will occur. Comment from Friday: <169>I'm hoping for a week ending close today of 107-something.<170> Friday's 107-12 close indicates the anticipated liquidation has begun and the trend is accelerating. The next stop will be 106-23. 1 will remain a short-term bear until the market closes above the 10-day moving average of the daily high prices today located at 109-01. The moving average is falling about 3 ticks per day.

Strategy: None.

March 31, 1997

Alex Saitta and Jason Wang
Salomon Brothers, Inc.
Seven World Trade Center, New York, New York

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