Shorts on D-Mark and T-bonds; S&Ps in the buy zone

S&P 500 futures

Short term: The March futures [SPH9>SPH9] are in the buy zone (1240 or lower).
Because volatility has increased to October 1998 levels, it’s necessary to use wider stops
(no closer than 1205) or
trade smaller positions to avoid getting stopped out of the market amid all the noise.

Long term, the trend is up for investors (notice I say investors, not traders).

T-bond futures

Short term: The current rally has moved the March contract [USH9>USH9] into the short
zone at 127 09/32. Wider stops are necessary because of volatility (no closer than 128 15/32).

Long term: Nothing new; the trend is still down. Brazilian worries will eventually subside and
Bonds will lose their safe-haven buyers.

Currency futures


Short Term: The dollar is under pressure because of the Brazilian
problems, and the March D-Mark futures [DMH9>DMH9] are in the short zone at 60.00.
Look for pullback in the next day or two.

Long term: Neutral.

Next update: Friday, January 15