Discretion The Better Part Of Valor On S&P Short Position
| CURRENT POSITIONS (As of 4/28/99) | ||||
|---|---|---|---|---|
| Market | Long/Short | Entry | Stop | Target |
| June T-bonds | Short | 121 22/32 | 122 18/32 | 121 05/32 |
| June S&Ps | Flat | – | – | – |
| June Swiss franc | Flat | – | – | – |
Note: All price levels are approximate.
S&P 500 futures
We have been short the June S&P [SPM9>SPM9] for a couple of days now but have still not managed to cover at our exit price. We will close the position out today on the close and re-evaluate. When a position fails to do what you expect it to do within the time frame you’ve established, my experience has shown it is best to exit and try again later. (Note: Figure 1 shows the exit today at 1359.)
Figure 1. June S&P futures (USM9), 30-minute bar. Source: Quote.com.
Currency futures
The June Swiss franc [SFM9>SFM9] and Euro [ECM9>ECM9] both dropped on the day. We managed to exit our Swiss franc longs at the .6669 level yesterday for a small profit. The Balkans conflict has been a negative for these currencies since the war started, but both these contracts rallied earlier in the day when comments by the Serbs outlining a peace proposal sparked a round of buying. But the market soon forgot about this news and bears sold into the rally; by the end of the day all the gains had been erased. We are now on the sidelines as our models give us no clear direction.
Figure 2. June Swiss franc futures (SFM9), 30-minute bar. Source: Quote.com.
T-bond futures
The June futures [USM9>USM9] dropped about 10 ticks today. We established our shorts yesterday (Tuesday, April 27) at the 121 22/32 level. The Durable Goods report came in stronger than expected at 2% vs. the 1.5% consensus. This further supports our view that the economy is getting stronger and that sometime in the next 6 to 12 months the Fed will not be able to ignore it any longer.
We will try to cover at the 121 05/32 level and will put a stop in at the 122 18/32 level. Tomorrow the Employment Cost Index will be released. This report will be closely watched as employment costs are a key factor in determining inflation. Stay tuned.
Figure 3. June T-bond futures (SFM9), 30-minute bar. Source: Quote.com.
Next scheduled update: Friday, April 30, 1999
(Check “Today’s Schedule” every day on our home page to find out about additional updates.)