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Strategies & Market Trends : The Rational Analyst

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To: HeyRainier who wrote (876)	5/7/1998 7:23:00 PM
From: IQBAL LATIF	Read Replies (1) of 1720

Rainier-- Happy birthday and some thoughts on economic numbers- This was posted on idea during the trading session today- My forecasts going forward- According to bond traders who thrive on rumors- we will have a strong employment number with weak hourly earnings.... The consequences will be that- 1st possibility- and that is what I think is going to happen-We will have selling pressure on opening, may be globex will suck in lot of amateurs and opening may not even show 100 down but in case we have a down opening I will if hourly earnings are below market go long at around 1093 support. in this case I see a possibility of- if hourly earnings shows no sign of creeping up, a run back up to 1130. This is good combo for the current market as I would like to see strong economy and low inflation, the ideal thing for corporate profits to beat consensus of 7.5% growth of corporate profits. The PC sales in Europe are coming along very well and I was happy to see that Techs were holding well at the opening. With NWX reaching 366 resistance that should be taken out I see Techs possible taking off. Fundamentals are good and with AG keeping quiet on 'exuberance' thing I would assume that markets will take a big cue from tomorrow. Bonds are a good long at 119-14 level or 5.98%. 2nd possibility-Now if we have a weaker employment number the natural thing would be that bonds would rally and we may have rally in stock market based on the fact that the rally of the bond is based on facts and not escape from ASEA or flight to quality. This rally will take up potentially back to that resistance 1130 but this rally will not have lethal produce to pierce thru this 1130 the former is a perfect match. 3-Third assumption- if we have a scenario that hourly earning are creeping up and a number strong this is a 'blow out bull combo' we will visit 1060 within few days PROBABLY 50 days support will be taken out on opening. I will wait until composite 1799 before I enter the market on long side I would assume that should pretty well correspond with my 1160. I think that market is prone to possibility one in my humble opinion 60-40. My trade would be long dip if I find the first configuration. Naturally on number where we see market expectations being met on both counts I don't have to say what should be the direction of the trade. Sterling was crucified today and 1002 has held so far very well. After market close- To: +Brian Fukuba (18315 ) From: +IQBAL LATIF Thursday, May 7 1998 7:13PM ET Reply # of 18316 Since break of 1130 we are back to 1098, my intermediate levels of 1118 with 1870 break on composite and 1105 on 1845-50 composite break were all taken out. We did see close below 1105 now 1085 within this week remains to be seen, due to 50 days MA moving higher I have moved this point of 1085 to 1092-- that probably will come if 1818 is probed which is my rough estimate of 50 days MA on composite. I see a strong probability that the we will see 50 days averages to hold well. SOX has closed below 310 but the area of 308- 310 is very much within the base of this uptrend move, in my opinion on a monthly chart SOX is perfectly poised. Towards the close I was tempted to take profits on my puts 1080 and 1060's but decided to go in number long puts since I think that scenario 1 of my employment number post will play out and I thought if I will be properly positioned I may get a chance to exit at the most opportune time--- the time when we may be down to 50days MA on composite. However, if we have a good number and good hourly earnings we may have a opening full 10 points up if that happens, I will wait first 30 minutes and sell some Mays 1100 puts against June 1080 this will first of all bring my cost down and secondly will give me insurance for the month of June. I would think that a good number tomorrow will as I have explained earlier take us thru 1030-- if number 1 plays out the way we think it would the jury is out and lets watch and see as market unfolds. It is just plain fun and pleasure to read markets and to play them with some game plan. MSFT puts must be quite handy-- short of a disaster I see nearly all major indexes on supports like composite below important 1840 SOX below 310 and SPM below 1102--- I would assume that good hourly earnings figure even in face of strong employment will help these supports to hold. The problem will be if we have two strong numbers then we revert to option... of my previous post. Thanks and good night-- Have a good rest and enjoy pre-number suspense

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