Prepared by Steven R. Myers

I want to lead off with the S&P top heading once again because this can have huge ramifications that will affect most of the markets. A market that has its fastest upside blowoff run and then turns sideways and very choppy will very often be indicating the making of a major top! This is very likely what is happening in the S&P. It may be best to at least get neutral there. The technical action will indicate another change if we get a close into new all-time highs. That would be the place to get back on board because there would most likely be a very quick 10-percent upside run. This is not what I expect to happen. A 30- percent down move would cause the totally bullish late comers to be bearish enough to throw in the towel. You only want to buy this market again when bearishness and worry come into play. You do not buy when everything appears to be as good as it could possibly get. Everybody has already bought at that point and all the buying potential is gone. Be bearish for now. Very Bearish!

Some of the more exotic markets have went sky high in price this year because of the El Nino weather problems. This may have some very bullish long-term ramifications on corn and beans for next year. It is beginning to affect the weather for the cocoa market right now. Cocoa was in a long-term base building phase on the weekly and monthly charts. Such a market is just waiting for such a supply problem to clash with the demand that the low price has built up. Cocoa could really explode once it gets to going. Remember how the weather nearly tripled the price of coffee last year. Call options may be one of the better ways for most people to play this market. Futures can be even better if you get in when it is taking off. We may be near that point right now!

Once in awhile a market will go straight up and give you little chance to buy on any kind of dip at all. In such a market you will have to buy at noon just below limit up just before it locks limit up for the day. Such a close on a market will often cause a much higher open the following day. The very fastest and strongest markets are the ones that you want to have the most contracts of. The only way to do this without having a huge initial risk is to scale in pyramid. Pyramiding works best for the very strongest markets. This will gradually bring your average buying price higher as the market goes higher and higher and you buy more and more. You see it may be possible to end up with 50 profitable positions and only have risk to a loss that is below a breakeven level only on one of the 5 lot scale up orders at a time.

It appears to be a little early for the seasonal low in corn, but weather may be making it early this year. There is a little weather problem here, but a lot in China and elsewhere. With the latest carryout level predictions it would justify corn to once again hit the $ 5.00-level. Corn seems to be the strongest grain at this time.

Investment

It is an old saying that commodity prices go the opposite direction of the stock market. This old theory was mostly based on the amount of inflation. Certain food commodities go up a lot without it affecting the price of gold. You have to be in the one market in which the shortage exists.

August 21, 1997 Steven R. Myers

Myers On Futures Co.

P.O. Box 777, Summerfield, Florida

Consensus National Futures and Financial On Line Index
Financial Commentary Index

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