wmeubank@ocp.kcmo.com
COMMODITY REVIEW AND OUTLOOK
195 Route 6A, Suite 6, Orleans, Massachusetts
(October 10, 1997) FINANCIAL INSTRUMENTS: BONDS–SHORT TERM–Greenspan's comments raised the specter of a rate hike again, just when the bulls were growing bold. A former Fed governor, Lyle Gramley, said he expects a rate hike by the end of the year. Friday is PPI.
RESISTANCE–Resistance lies near 116.20, 116.31, 117.16 and 118.18.
SUPPORT–December bonds have support near 116.00- 115.26, 115.13-115.16, 114.16-114.20, 114.00, 113.09-113.16, 112.20's, near 112.00 or so, 111.28 area, 111.18- 111.14.
RECOMMENDATION–I remain uncomfortable with the long side of the bonds at this time. Aggressive traders could sell into the December bonds on a rally to the mid-upper 116.00's with stops over 118.18 or 16-32 ticks. Support in the 115.20's has held the market on a close basis thus far, so be alert for a reversal in that area. Look for the low 114.00's. Follow-through to the upside should be treated as real if the market can reach new high ground. Use stops. Aggressive option traders might buy puts on rallies. Objective is open.
M. Steven Morgan
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