COMMODITY REVIEW AND OUTLOOK

195 Route 6A, Suite 6, Orleans, Massachusetts

(October 16, 1997) FINANCIAL INSTRUMENTS: BONDS–SHORT TERM–An unexpectedly higher retail sales figure sent the bonds down, but buying near the 115.00 level offered support. If Thursday's CPI number is over .3%, it could send the bonds much lower. Bonds are on the defensive at this time.

RESISTANCE–Resistance lies near 115.18 or so, 116.00- 115.26, 116.20, 116.31, 117.16 and 118.18.

SUPPORT–December bonds have support near the low 115.00's, 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 115.00's with stops over 116.16 or 16-32 ticks. Look for the low 114.00's. Due to the report, one can't count out a foray into the 116.00's, but if aggressive, sell the rally with a 16-32 tick stop. 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, but a move to the mid-low 114.00's is looked for.

M. Steven Morgan

Added to the WWW 10-17-97
Last updated on 10-17-97

Hosted by:
One Crossroads Place
610 West Maple Ave, Suite WWW
Independence, MO 64050
(816) 252-4080
sysop@kcmo.com

wmeubank@ocp.kcmo.com