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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: William H Huebl who wrote (7357)	10/25/1997 3:53:00 PM
From: John Hunt	Read Replies (2) \| Respond to of 94695

Bill & All Just spent some time looking at TA on my index charts. FWIW, it looks to me like the CRB index will have a big drop like gold. Digging into the component charts, oil and gas and Paper and Forest look very weak, and of course gold is also a component. I think the Asian crisis is going to result in a lot of cancelled orders for basic commodities. This could lead to massive oversupply and serious deflation. Of course, all just my humble opinion. Thoughts anyone? John PS - This is based mainly on the divergence between CCI and the indices over the past 3-4 weeks.

To: William H Huebl who wrote (7357)	10/25/1997 4:09:00 PM
From: randy kay	Read Replies (2) \| Respond to of 94695

Bill - I don't agree with your take on gold in 87'. Gold climbed like mad before the 87' crash, this was a glaring indicator. It has been doing the opposite for a while now. Today the economic climate is not the same as in 87' and POG has taken a beating for very real reasons. Randy

To: William H Huebl who wrote (7357)	10/26/1997 4:10:00 AM
From: tekgk	Read Replies (1) \| Respond to of 94695

Bill, You are right about 87, HM went way down. A counter example was 29 when HM went up 600% over the next 5 years. Another example is 66. I think that you are correct for today as long as we stick to a normal correction like 87. However, remember the derivatives markets are now just over 60 trillion. The equity of J.P. Morgan, for example, is just 0.21% of its derivatives holdings, meaning that a loss equivalent to just 0.21% of the derivatives portfolio, would wipe the bank out; Bankers Trust's equity is 0.26% of its derivatives, and Chase's is 0.32%, while the top eight banks have a combined 0.53%, and the top two have a combined 0.27%. A loss equivalent of 1.75% of the total derivatives portfolio of the U.S. banking system, would be enough to wipe out the equity of the entire system. I am not saying that this will happen or is even remotely likely to happen since most banks (except a few recent exceptions) normally use derivatives to hedge positions, not to bet on positions. My fear is that if a major player goes belly up (fill in the blank big Asian bank) and forfeits on a bet then even a small ripple could lead to severe problems. This could lead to severe strains on the entire world wide financial system. The derivatives markets are to a large extent a new phenomena, that has yet to be tested by a severe market or economic decline. Like I said, gold is a very, very small portion of my investments and I HOPE and expect to lose money.