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Strategies & Market Trends : Point and Figure Charting

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To: NickSE who wrote (13965)	2/13/1999 3:53:00 PM
From: james ball	Read Replies (2) of 34811

Nick the Dow Jones 20 Bond Average is 20 Corporate bonds selected by Dow Jones. I remember a time when we had to contact Dow Jones to take Herculese out as the bond was a convert and trading like a stock. It is the best index I have found to keep us in line with interest rates. When it gave a sell signal a week or so ago it was serious. We went long bonds in June 1997 and this index kept us long until a week ago. The UTY and the Utility BP already suggested trouble as did futures. We tried to be as serious about this as possible and I hope our clients followed the signal. I think Greenspan, Rubin and Co. have been keeping rates down and the economy flooded with money to keep Clintons approval ratings up so he could get through this impeachment process. Now that it is over I think they will get about the serious business of reigning in some of these dollars. They may have let it run too far however. We could debate the clinton part of this forever and I could be wrong. The recent, last week, cover of Time with Greenspan, Rubin and Rubins right hand man on the cover suggests the honeymoon is over with these men. I have this feeling that the end of the impeachment process closes one door and opens another. The open one has not shown us what is behind yet. Might be Officer O'Mally of the Cheech and Chong days. Keep in mind now that there are about 150 nations in the world that have for years kept their reserves in dollars. Now that the Euro is out and the Yen is stronger they have a choice. We have enjoyed the ability to print money when ever we pay for foreign goods like oil because the price is always in dollars. What if they change that and price oil in Euros or Yen? The relative strong dollar and low prices (dumping in some cases) is what has been a major factor in keeping inflation low over the years. This situation is about to reverse and is signalled by the above indicators. It doesn't pay to think too deeply into it other than an exercise in mental exercise which is always fun. The indicators see much more than you or I do which is why we call them indicators. Money supply has been exploding for a long, very long time and the interest rate indicators might be suggesting the show is over. We'll see. If the 20 Bond Average is on a sell signal I am negative on bonds period. Again the 20 Bond Average was ahead of Wall Street. Tom

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