wmeubank@ocp.kcmo.com
IRA EPSTEIN & COMPANY
223 West Jackson, 7th Floor, Chicago, Illinois
(October 28, 1997) CURRENCIES: D- MARK–Yesterday, Monday, October 27, 1997, with the Dow Jones and the S&P 500 down tremendously, there was a flight to foreign currencies, and the D-mark had a strong rally. The close of 5707 Friday was up 67 points from Friday's close. Today, Tuesday, October 28, 1997, the market settled at 5768. This market had broken its up trend line in early October and today moved back above that trend line. I believe this flight to the D-mark now offers an opportunity to sell it short.
FUNDAMENTALLY–Bearish. According to Euro Currency Research the latest figures show that “the German recovery” is still rather one sided–based only on exports. Domestic demand is still sluggish. Many businesses consider producing in Germany too expensive–owing to the high labor costs, taxes etc.–by international standards.
RECOMMENDATIONS–Sell. I recommend selling this market at 5906 and using a 6063 stop. I think this market is going to show a little more strength before it retests its major support level of 5350. Moreover, I think that much of this market's strength has been based on technical buying over the past few weeks and should be over soon. Fundamentals are too weak to inspire traders to continue buying the D-mark.
Kyle Graham
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