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With New NASDAQ Highs, Expect to see Further Upside Action

  • November 3, 1999
  • Manuel Ochoa








PREVIOUS POSITIONS
Market

Long/Short

Enter
 size=2 color=000000>Exit size=2 color=000000>P/L (per contract)
Dec. 99 T-bonds Long 111-25 111 -$781.25
Dec. 99 S&Ps Short 1378 1362 $4000
Dec. 99 Swiss franc Long .6795 .6690 -$1312.50






CURRENT POSITIONS (AS OF 11/3/99)
Market Date Long/Short Enter Stop size=2 color=000000>Target
Dec. 99 T-bonds 10/29/99 Short 113-15 114-19 113-04
Sep. 99 S&Ps – Flat – – –
Dec. 99 Swiss franc 11/3/99 Long .6550 .6500 .6580



Note: All price levels are approximate.

T-bond futures

The index of Leading Indicators and Factory Orders both fell slightly more than expected–all good news for the bulls

The December T-bond [USZ9>USZ9] rallied moderately today after the Treasury department announced that it will pay down some of the federal debt. The amount was more than expected, $4.3 billion, which would effectively cut the supply of government bonds by that amount–hence the rally.

In addition, the government also reported that the Index of Leading Indicators and Factory Orders both fell slightly more than expected. All this was good news for the bulls. We are still short, but we are trying to cover at the 113 04/32 area because of the market’s unexpected resiliency.

Stock index futures

With the Nasdaq making new highs, we suspect we will see further upside action
The December S&Ps [SPZ9>SPZ9] gained today after bonds rallied this morning. The market is in a short-term uptrend and we will look to get long on a pullback.

With the Nasdaq making new highs the other bulls have come out; we suspect we will see further upside action. The Employment Report comes out Friday, which could give us a good opportunity. The CBOE volatility index (VIX) has dropped back to the mid 20s after coming down from its highs last month, another bullish signal.

Currency futures


Technical funds that use momentum to establish positions put on additional shorts
The December Swiss franc [SFZ9>SFZ9] fell today on further strength from the U.S. stock and bond markets. Many technical funds that use momentum to establish positions put on additional short trades.

We established a long position today at the .6550 area with stops in around .6500 and a profit target at the .6580 level because we expect a pre-Employment Report rally leading into Friday’s number.



Figure 1.   December Swiss franc futures (SFZ9), five-minute bar.   Source: Quote.com.

Next update: Friday, November 5, 1999.

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