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To: donald sew who wrote (43805)	5/22/1998 5:15:00 PM
From: Stoctrash	Respond to of 58727

Don, you are HOT!!! I love you man!!! Not only fundamental issues like the bonds, but what about things like the nuke threat in India? I would assume things like this could be the trigger also. If I were to guess, I'd say the bonds are key. Maybe the Jap's repatriate some Yen and sell a load of US Gov'ies? That would be a catalyst for the downside. What would be the same for the upside? fred

To: donald sew who wrote (43805)	5/22/1998 5:30:00 PM
From: Lee	Respond to of 58727

Hi Donald,...Re:<<I believe that for the main fundamental issue is if interest rates can stay below 6%. >> Looking at the chart below, we have been in an interest rate range of 5.75% to 6.1% since Jan. In MHO we have nearly equal forces which will tend to keep bonds in this range until one of the forces becomes excessive. chart1.bigcharts.com:80/report?r=chart&onbad=badsymbol&country=us&time=7&freq=1&compidx=aaaaa%3A0&ma=4&maval=9&uf=7168&lf=1&type=2&style=3&size=2&symb=TYX&comp=&sid=11421&sec=x&xyz=11608984&s=7752 To keep rates below 6% and falling - -Decreasing supply from the Fed because of increased tax receipts -Decreasing CRB -Flight to quality for SE Asia flare ups -CPI yr/yr of 1.4% -Strong Dollar To keep rates at 6% and rising - -Increasingly tight labor market -wages rising 4.4% yr/yr -Decreasing productivity which tends to offset rising wages -Increasing wage pressure in the tech industries -continued GDP growth >4% -Dollar weakness Needless to say, any change in commodity prices can affect CRB quickly, (i.e. grain prices, crude, cu, etc.) but offsetting these may be the continual decline in treasury offerings causing increased 'demand'. JMHO Regards, Lee

To: donald sew who wrote (43805)	5/22/1998 8:01:00 PM
From: jjs_ynot	Read Replies (2) \| Respond to of 58727

Don, It appears that we have a race between slowing earnings and a slowing economy. Housing starts have started to fall of as have commodity prices and new job creation. However, earnings are growing at an anemic pace an pricing power is almost nonexistent. New home pricing power is declining. At this point a tightrope walk is the order of the day IMO. The upside appears to be very limited. The downside is very murky. My market bets going forward are basically those which will win if the market doesn't move up (i.e. vertical-like spread strategies). This market has breakout potential based on daily MACD charts but no catalyst to make it happen. We are on a very precarious balance. My thoughts. Any rebuttals are welcome. dave

To: donald sew who wrote (43805)	5/23/1998 11:16:00 AM
From: James F. Hopkins	Read Replies (2) \| Respond to of 58727

Donald; I have for a long time encouraged people to watch the price of crude oil. Of all commodities oil is figured into the price of every thing we do and touch. We are at this time the benefactors of a low oil price. Here in the US we are effected by the price of oil more than most of the rest of the world. Our infrastructure being ahead of most of the world allows the logistics of supplies to work here in a fluid way that gives us a real edge productivity wise. Even in the labor market, workers here can commute in a way that lets the skill match the demand for the skill, all that is stimulated with cheaper oil and curtailed as oil prices go up. The price of other commodities are also important but none of them can match oil. The coupling to the stock market is not as direct as interest rates due to the short term thinking of the financial wizards of our time however if we reach out some we see the change in oil prices likely has more effect than interest rates, OR at least as much because as productivity goes up profits are helped out and profits compete with interest rates. There is a war between the forces of those who want to control every thing via interest rates ( old money ) and new enterprises coming on line that need to borrow to get started. It's here too that cheap oil helps out in more ways than one by aiding the new upstarts. ------------------- I think calling a top to the stock market may be better achieved by looking at raw commodity prices in general. ( not so much gold or silver these things take a back seat to the amount of oil, copper, aluminum, steal, lumber and cement we use. Keep an eye on the basic commodities when and if they surge up in price, other things will follow and inflation will result causing interest rates to respond and the stock market will dive. Jim PS if you live around a big city where there are scarp yards keep an eye on scrap prices , like what the going price is for the crushed wrecked cars and junk you can sell may give you some warning, is it going up or down , or up at a faster rate percentage wise than stocks. I picture first a surge here..then a hike in interest rates and a melt down or correction across the board.