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ASPRAY'S GLOBAL TRADER
World Stocks Drop After Hang Seng Plunge
Dollar Tests First Strong Support
The markets are reported as of the close Thursday.
The dollar held near its highs until early European trading as the selling spread from stocks to the dollar. The 10% decline in Hong Kong stocks was the initial catalyst that spread around the world. Their market is stable early Friday, but a higher close is needed to calm the markets.
Despite the sharp slide in the dollar versus the DMK and SWF, it has only retraced 50% of its previous rally. The daily studies have dropped, but are still positive, which indicates the decline Thursday is just a pullback within the uptrend.
The dollar rallied sharply versus the yen as first resistance was overcome.
DEUTSCHEMARK/U.S. DOLLAR: The hourly chart shows the sharp correction from the 1.7900 area as the dollar eventually reached the 50% support level at 1.7630. More important support at 1.7550-7600 and the 61.8% support level. Initial resistance at 1.7700-30 with stronger at 1.7780-7800. The daily indicators are positive but declining.
Summary–Traders are 25% long 1.7474- 1.7512, stop at 1.7549. Added 25% long at 1.7674-7722, stopped out at 1.7757.
DEUTSCHEMARK/YEN: The cross has rallied in very impressive fashion as 69 level was overcome. This likely changes the trend and will look for a setback to evaluate. Traders were 25% short at 68.86-69.19, stopped at 68.33.
Dollar Rallies Sharply Against Yen
The dollar had an impressive performance versus the yen today as the resistance in the 121.35-50 area was overcome. The dollar has pushed above the 122 level in early Friday trading before some profit taking set in. The daily studies have improved, but are still negative overall. They need a further rally to turn positive.
Summary–Go 25% long at 121.33-66, stop at 120.88.
STERLING/YEN:The STG/yen surged above the 1198 level in early trading and the 1199 level has been surpassed in Tokyo trading early Friday. Technical action is positive, but would not chase the long side.
SWISS FRANC/YEN: The cross continued to rally sharply Thursday as it has moved well above the key resistance at 83. This is impressive and a higher weekly close will be positive. Traders were 25% short at 82.73-93, stopped out at 82.13. We never got a chance to lower our stops further.
STG Crosses Correct Sharply–Ouch!!
The STG dropped to the 1.6260 area in Europe and then bounced sharply to the resistance in the 1.6335-50 area. The daily studies are still positive with key resistance now in the 1.6380-6400 area. A sharply lower close is needed to change the near-term trend. No current position.
STERLING/DEUTSCHEMARK: The cross was trading above 2.9200 before the selling kicked in as the support at 2.9000 and 2.8900 were both broken. The daily chart nd technical studies do indicate that this just a correction with the uptrend. We will look to get back on the long side. Traders were 25% long at 2.8338, stopped at 2.8962. Added 25% long at 2.9100-80, stopped at 2.8993.
STERLING/SWISS FRANC: The STG/SWF has broken back below the 2.40-00 level which is cleanly a short-term negative. Next good support in the 2.3800 area. Traders are 25% long at 2.3600-3617, stop at 2.3577. Added 25% long at 2.41-4220, stopped out at 2.3973.
Dollar Weak Versus Canadian Dollar & Swiss Franc
The threat of higher Swiss rates hit the dollar hard as the support in the 1.4650 area has been reached. There is next strong support at 1.4550-4600. Though the daily studies have dropped sharply, they are still all positive. A higher daily close will be the first indication that the decline is over. Traders are 25% long at 1.44554-4604, stop at 1.477. Added 25% long at 1.4692-4748, stopped out at 1.4727.
DEUTSCHEMARK/SWISS FRANC: The cross is still testing the lows and the support in the .8280 area. The daily studies are still positive but have deteriorated. Traders are 25% long at .8307-8314, stop at .8247.
CANADIAN DOLLAR: The dollar was also weak versus the CAN$ as the support in the 1.3870 area was reached. More important support in the 1.3850 area. The resistance is strong in the 1.3920-50 area and the downtrend on the daily chart. No position.
Bonds Sharply Higher, But Stocks Close Very Weak
The bonds pushed above the 11516-20 level in early trading and then accelerated to the upside. The resistance at 117 was eventually reached before the shorts were all stopped out. The daily chart is looking slightly positive now but we are still suspicious. The upper trendline is in the 118 area. Was 25% short at 11527-30 stopped at 11617. Also 25% short at 11501-05, stopped out at 11523.
U.S. STOCK MARKET: The U.S. market was week basis the futures several hours before the official opening. The selling took the Dow down 250 points but it closed a bit above the highs. The cash S&P needs to break the 880- 900 to complete a major top.
October 24, 1997Thomas E. Aspray
APM Asset Management
P.O. Box 15366, Little Rock, Arkansas
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