Volatile Market Causes Set-up Drought
Short-term perspective: The March contract
[USH9>USH9] was little changed today. The Consumer Price Index (CPI) number released
this morning eased the market’s inflation worries after yesterday’s
Producer Price Index (PPI) raised some concerns on that issue. We’ve had no trade setups since
last Friday (February 12).
Long-term perspective: Bonds are still in a downtrend. The market has stabilized since last
Friday’s sharp sell-off, but I feel this is only temporary. The market is still concerned
the overall economy is heating up, which will push interest rates higher and bond prices
lower. Current position: We’re still short the March futures with a stop in at the 125 level.
Deutschemark and Japanese yen:
Short-term perspective: The March D-mark [DMH9>DMH9] had a
sharp sell-off today as perceptions of higher U.S.
interest rates made the U.S. dollar more attractive versus the D-mark.
However, there are no trade setups here.
Long-term perspective: The D-mark and the March Japanese yen [JYH9>JYH9] both remain in
downtrends. Keep close tabs on next
week’s testimony by Fed chairman Alan Greenspan on the state of the economy. Traders will be
clues to confirm their fears about the possibility of higher interest rates.
Current positions: We’re maintaining our short positions in the March D-mark and yen with stops
in at the 5900 and 8500 levels, respectively.
S&P 500 futures
Like the overall stock market, the March futures [SPH9>SPH9] are directionless–they cannot
figure out where
they want to go. It is best to stay out of markets like this, and that is what we continue to do.
Next scheduled update: Monday, February 22, 1999
(Check “Today’s Schedule” every day on our home page to find out about additional updates.)