Good Opportunities With Higher Market Volatility

T-bond futures

Short-term perspective: Government reports showing
increasing activity in retailers
and housing construction showed the U.S. economy gaining strength, again
feeding fears about interest hikes later in the year. We managed to sell
our longs in the June contract [USM9>USM9] this morning on the open for a small profit. We are
now on the sidelines.

Long-term perspective: We maintain our short position in the June futures as the downtrend
remains intact. The bond market is pricing in a interest rate hike later
this year, but if this does not happen, bonds should rally from this point. We have
stops in at the 125 level.

Currency futures

Short-term perspective: No trade. We’re still flat the March D-Mark [DMH9>DMH9].

Long-term perspective: We’re still short the D-Mark as the dollar gets more
support from the possibility of an interest rate hike (investors holding dollars
instead of D-marks will earn more in a higher rate environment).

S&P 500 futures

We sold our longs in the March
futures [SPH9>SPH9] yesterday on the open and managed to make a small
profit. For now, we’re on the sidelines, but we anticipate increased
volatility in the near future as the market deals with possible rate
increases. This should provide excellent trading opportunities.

Next scheduled update: Friday, March 5, 1999

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