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Strategies & Market Trends : MARKET INDEX TECHNICAL ANALYSIS - MITA
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To: J.T. who wrote (590)8/12/1999 6:09:00 PM
From: pater tenebrarum  Read Replies (1) of 19219
 
J.T., i saw an interesting statistic today, which showed that foreign money flows into t-bonds have just turned negative for the first time in 20 years. this would certainly explain the extreme weakness in the bond market in spite of relatively benign inflation data and a proposed reduction in supply. it also points to the likelihood of a further weakening of the dollar, which in turn would almost certainly lead to a sharp decline in the stock market. Martin Armstrong of PEI argues that a monthly Dollar/Yen close below 110 would be the precursor to a financial and economic catastrophe.
while i wouldn't go that far, the possibility of a forced unwinding of the Yen carry trades still extant during a time when both stock and bond markets show signs of nervousness is rather hair-raising. we must always keep in mind that the 'generals' which are holding up the indices are incredibly overvalued and represent 'crowded trades', i.e. everyone is in them, well aware of the valuation concerns and hoping he will be able to get out in front of everybody else. this is one of the preconditions for a panic, although another precondition, namely share-ownership concentration is not as of yet met.
note that Goldman Sachs has recently upgraded a few gold mining stocks and rumor has it that they have taken control of large amounts of bullion in NYMEX warehouses. perhaps a short squeeze is being prepared; if so, this could mean trouble for a few hedge funds, which look somewhat shaky already by all accounts. something to keep an eye on.

regards,

hb
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