Caution On S&Ps; Watch For Sell-offs On Foreign Currencies

• June 14, 1999
• Manuel Ochoa

PREVIOUS POSITIONS
Market	Long/Short	Enter	size=2 color=000000>Exit	size=2 color=000000>P/L (per contract)
Sep. 99 T-bonds	Long	116-06	115-05	-$1031.25
Sep. 99 S&Ps	Short	1328	1327	$250
Sep. 99 Swiss franc	Long	.6555	.6575	$250

CURRENT POSITIONS
Market	Date	Long/Short	Enter	size=2 color=000000>Stop	size=2 color=000000>Target
Sep. 99 T-bonds	–	Flat	–	–	–
Sep. 99 S&Ps	6/10/99	Long	1322	1300	1315
Sep. 99 Swiss franc	–	Flat	–	–	–

---

Note: All price levels are approximate.

S&P 500 futures

The September S&Ps [SPU9>SPU9] were flat today even as bond prices were rising. This was very disappointing. We have lowered our profit target to the 1315 level because we feel a little more cautious.

The NASDAQ was very weak today even though the Dow Jones Industrials rallied. We view this as a sign of weakness for the S&Ps as well. Stay tuned.

Figure 1. September S&P futures (SPM9), 15-minute bar. Source: Quote.com.

T-bond futures

The September futures [USU9>USU9] bounced moderately today on bargain hunting and short covering. Despite Greenspan’s warning of a stronger economy, the market was firmer, indicating that yields have gotten to the point where the market
wants to reconsider before Wednesday ‘s CPI. We are still on the sidelines.

Currency futures

The September Swiss franc [SFU9>SFU9] and Euro [ECU9>ECU9] fell today after Friday’s gains. The intervention by the Bank of Japan in the yen set the stage today for the selling in the other currencies.

In addition, now that the peace process in Kosovo seems
to be moving forward, the short-term traders who bought in anticipation of
this are taking some of their profits off the table. We are still on the
sidelines until (possibly) Wednesday’s CPI.

Next scheduled update: Wednesday, June 16, 1999

(Check “Today’s Schedule” every day on our home page to find out about additional updates.)