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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: IQBAL LATIF who wrote (16139)	1/5/1998 8:34:00 AM
From: IQBAL LATIF	Read Replies (2) \| Respond to of 50167

Bond trading and about to take out 122,10 historical all time high on TB prices- watch out for technical correction and a retracement - expect this from 122,28 back to 119,16 - Economic numbers become more important we could ignore NAPM softness and move higher but watch out if we get stream of weak numbers we may have a good trade on down side- match your trade with economic calender of briefing com. Bond strength will only continue if numbers indicate a slow down but some where this relationship of equity and bond rally will give up- equities cannot keep rallying on stream of sotening numbers somewhere we will have some smart guy will errorneously call for 'profit growth' slow down and we may see market opening limit lower. We need strong numbers with bonds softening and market taking out new highs as pundits wake up to the fact that bond yields minus dividend yields are forming a pattern which has inevitably resulted in rallies 7 out of 10 times- I hope this basic contradiction will soon be over as numbers come strong bond retreats a bit and market appreciates the new long bond yield curve. Equity market has not fully priced the move up from 6.25 to 5.75- even if we go back to 6 we have a good room for rally. I hope I am clear.

To: IQBAL LATIF who wrote (16139)	1/6/1998 11:42:00 PM
From: IQBAL LATIF	Read Replies (7) \| Respond to of 50167

Bonds are yielding 5.71%- I expect Bonds to test 5.90-6.10 area consolidate and move up to 5.50% by June- however on Friday I expect bond to trade down. SPA- we had two closes above 980 and tested 992 during last two days but inability to stay above 980 shows investors worries on state of corporate earnings- I would assume comparing this pre-earning month with the last so far companies have been unexpectedly quiet- it was in early Dec that going forward expectations were tappered by the analysts- it is significant that so far none of the majors have come up with revisioins downwards- does this mean some upward surprises- I think Byron Wein and Abby expectations of 10% or 8% earning growth will be achieved- strong factory orders cannot be overlooked. I will expect 962 to hold until Friday- the second round of currency based selling in ASEA has so far not impacted Japan- Korea has maintained strength despite of heavy selling in Malayasia Indonesia -I think HSI is forming a new bottom and will turn from here a higher low, Japan has nicely remained above 14500 a key level below 15000- the only explanation is hidden reserves created by bond rallies which has given Japanese bank ability to withstand this critical support. I see corrective rally moving markets in ASEA soon to emerge- the falling bond yields will belatedly- as I have written earlier bond money is smart money and to make this impact on the market it will take some time. Bond yields at these levels are mix of 'flight to quality' and softening of economy however I believe bonds have discounted strength market a little excessively and Friday will determine the new band positively- the 'flightto capital' and slowing economy premium' is bit rich in the bond as markets stabilise one of this excessively relied premiums will need to be discounted. SOX- we tested 287 inability to hae a single close above 280 shows extremely bearish sentiment- the way SOX came up within few days from 243 to 287 it is perfectly possible to see a retracement to 268-2 area - I have written earlier we need to see and watch key leaders like INTC TXN MOT if earnings on these three meet the market you will see SOX above 310 in no time- I will only recommend shorting SOX below 252 and if TXN INTC or MOT takes out 43 69 56. I expect numbers to be strong and markets to maintain supports- only if Japan or Korea starts slipping and we have a close below 962 on SPA we will come up with new levels to watch. Today a test of 968 on the cards on SPA may be 268 on SOX a close above 980 will be very positive - SOX a break of 268 should be watched I will like to square my long 250 positions at this break on closing basis today.I am still weary of shorting SOX before 252 level- lets watch interestingly-