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TECHNICAL DATA MARKET REVIEW
Interest Rates
DECEMBER BONDS: December bonds made a clean break of the October 3 descending trendline at 115.05 on October 22, reaching 117.00 before stalling, and currently trading at 116.00. While the daily chart maintains a bearish pattern of lower highs and lower lows, daily stochastics have crossed bullishly, and the contract is consolidating above the 20-day moving average at 115.25. Also note that weekly ADX continues to uptick, indicating that the longer-term bull move remains intact. Therefore, new longs are recommended against the October 17 trendline at 114.30 in anticipation of a break above the October 8 high of 117.24.
MARCH EURODOLLARS: March Eurodollars flirted with 94.00 supports this week, but maintain a bullish bias, currently trading at 94.09. The daily chart will maintain a pattern of higher highs and higher lows until the September 11 low of 93.94 low is taken out, and with daily stochastics crossing bullishly from below 25, new longs are recommended against 94.00. Look for a close back above the 20-day moving average of 94.10 in order to confirm further strength to the October 8 high 94.25. Stops below 93.94.
Commodities
DECEMBER GOLD: December gold continued to weaken, establishing new relative lows of 322.0 on October 22, currently trading at 324.3. While the contract may find support at the bottom of the September range at 321.0, the technical outlook will remain bearish until gold can break above the October 1 descending trendline at 330.0. Daily studies anticipate further weakness, but following last week's rally, we prefer to buy a break of 330.0.
DECEMBER CRUDE OIL: December crude bounced off the October 20 low 20.62, currently trading at 21.42. The contract is attempting to recover, but is trading at critical resistance. The 20-day moving average and October 3 trendline come in this week at 21.42, but daily stochastics are very oversold, and anticipate strength in he near term. Therefore, traders can look to buy against 21.16 support with targets at the October 17 high of 21.75. Stop on a break below 21.00.
DECEMBER WHEAT: December wheat established new relative highs of 379.4 on October 22, and the technical outlook remains bullish. The daily MACD oscillator is on the verge of breaking above the zero line, and new longs are recommended against the October 2 trendline at 367.4. Target new highs to 384.4 with stops on a close below the 20-day moving average at 363.7.
NOVEMBER SOYBEANS: November beans have yet to establish new highs above 729.0, and while the October 10 gap at 685.0 remains intact, time is running out for the bulls. The contract has been unable to hold above 700.0, allowing daily momentum studies to turn over bearishly. However, in light of the recent performance, we will stay long in anticipation of new highs to 750.0. Stop on a break below 685.0.
Dollar
DECEMBER YEN: December yen pegged the June 11 trendline to the tick at 8458 on October 17, keeping the bear trend intact. Daily stochastics have crossed bearishly, and the MACD oscillator is failing at the zero line. Stay short or sell against 8437, and look for the yen to take out the September 22 low of 8223 to continue a pattern of lower highs and lower lows.
DECEMBER DEUTSCHEMARK: Broke below the August 6 trendline at 5688 on October 17, reaching 5595 before bouncing to 5672. However, note that the September 23 low of 5580 was not taken out, keeping the pattern of higher highs and higher lows intact. As daily stochastics stall in oversold territory, new longs are recommended against 5600 with targets at 5700-15.
DECEMBER POUND: Just as we give up on our bullish bias, the pound blasts to new relative highs of 16366 on October 21. Now with the contract at 16294, new longs are recommended against the September 9 trendline at 16106. Look to fill the July 25 gap between 16440- 16500.
DECEMBER CANADIAN DOLLAR: The Canadian Dollar continues to fall this week, reaching 7201 on October 22 before bouncing, currently trading at 7217. The daily MACD oscillator has broken below the zero line, indicating that momentum is accelerating to the downside. We maintain a bearish bias for the Canadian Dollar, and recommend new shorts against the October 21 high of 7247 with targets at new lows. The May 21 channel implies downside targets of 7160. Stop on a close above 7266.
Stocks
DECEMBER S&P 500: December S&P's penetrated the April 14 trendline at 953.93 on two occasions this week, and the outlook is turning bearish. Both the daily MACD and stochastics oscillators have not confirmed the recent strength to 980.50, indicating a potential bearish divergence. With the contract currently trading at 954.00, a close below the April 14 trendline at 953.93 would confirm these divergences, and see continuation to the September 12 low of 913.00. We prefer to stand aside or sell strength against the 20- day moving average at 969.50.
October 23, 1997Roman I. Dutkewych
Technical Data
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