FISHBACK MANAGEMENT & RESEARCH

P.O. Box 23798, Lexington, Kentucky

(August 21, 1997) FINANCIAL INSTRUMENTS: DECEMBER BOND FUTURES–Our bond market model, which turned neutral a few days ago, moved back to bullish overnight, as two indicator groups improved dramatically. As you know, the level of bullish sentiment in the market got quite excessive. That is bearish from a contrary opinion point of view. Well, the huge sell- off the last two and a half weeks totally eradicated any trace of excessive bullishness. And that pushed sentiment from bearish into neutral ground. Besides, the improvement in sentiment, the trend in interest rates improved back to bullish, as investors pushed rates lower late last week. Furthermore, gold prices continue to muddle at lower prices, which is positive for inflation prospects and is a positive for the market.

RECOMMENDATION–Sell the October 111 put (settle, 16/64) and buy the October 109 put (settle, 4/64) for a minimum credit of 18/64 or better. If you can't enter the trade by Tuesday's close, cancel your order and wait until further instructions.

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