Long On S-franc and Euro
| CURRENT POSITIONS (as of 5/21/99) | ||||
|---|---|---|---|---|
| Market | Long/Short | Entry | Stop | Target |
| June T-bonds | Short | 118 5/32 | 119 5/32 | 117 26/32 |
| June S&Ps | Flat | – | – | – |
| June Swiss franc | Long | .6600 | .6500 | .6640 |
Note: All price levels are approximate.
S&P 500 futures
We covered our short position today around 1341. The market continues to trade in a range and we will look to buy Monday around 1330. With bonds now beginning to find their new range, stocks should consolidate at these levels, but there will probably be resistance to higher prices for now as investors keep a close eye on interest rates. Last week’s CPI report has not been forgotten and we are on an inflation watch.
Figure 1. June S&P futures (USM9), 15-minute bar. Source: Quote.com.
T-bond futures
The June futures [USM9>USM9] rallied today. Our 118 05/32 short position is still in and we will try to cover Monday at the 117 26/32 level. Stops are around 119 05/32 area.
There were no major reports of interest today. Buying on the part of the Fed this morning encouraged further buying in the afternoon. We think we will continue to see range-bound trading next week. Volatility levels are starting to drop again as the market finds a new equilibrium level.
Figure 2. June T-bond futures (SFM9), 15-minute bar. Source: Quote.com.
Currency futures
The June Swiss franc [SFM9>SFM9] and Euro [ECM9>ECM9] dropped today on a German report on business sentiment that showed Germany’s economy (the largest in Europe) continues to be sluggish, suggesting future rate drops by the European Central Bank (ECB). This news made the currencies less attractive as investors see lower interest rates being earned on the European currencies.
Technically, however, we believe this development already has been factored in and we took a long position at the 6600 level with stops in around 6500 and a profit target at the 6640 area. Stay tuned.
Figure 3. June Swiss franc futures (SFM9), 15-minute bar. Source: Quote.com.
Next scheduled update: Monday, May 24, 1999
(Check “Today’s Schedule” every day on our home page to find out about additional updates.)