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Strategies & Market Trends : Systems, Strategies and Resources for Trading Futures -- Ignore unavailable to you. Want to Upgrade?

To: Tom Trader who wrote (9312)	12/3/1998 9:23:00 AM
From: j g cordes	Respond to of 44573

Hi Tom.. Some thoughts. Germany cut rates this morning which reversed sentiment on futures from negative to a relief pop. Obviously the current highs are significant because the worries which tripped the plunge in August to 7400 haven't gone away. Overnight there were and continue to be serious currency worries over devalueing Brazil, and Asian markets aren't showing real strength.. just technical bouncing. The root problem is commodity deflation, which has grossly undermined the ability of second tier countries to repay their development borrowings to first tier countries. Literally, in order to save ourselves we have to inflate our currencies (devalue), to provide ample money lubrication in the world trade and currency exchange system... as do the Japanese, Germans, Brits and to some extent the French. High level IMF policy is on the side of not allowing isolationist thinking. Which is more important? The market running at excessive highs with quick selloffs, which is the result of having excess capital in the system.. OR cutting back on slosh to restrain speculation, which would slow world trade and implode world banking and currency. I think the current thinking is to let equity markets do whatever they're going to do on their own while every effort is made to support trade and currency stability. This means more volatility and higher trending markets.. Germany's dropping rates signals that the Fed has room to ease without impacting Mark/Dollar if it needs to. The glaring truth of this mess is this.. the second tier commodity countries have lost their currency value due to loss of commodity value. The first tier countries have to lower their own currency valuations or the disparity threatens everyone. The method of lowering currency valuations is to drop rates and print money, this in turn adds fuel to our market. If you don't see inflation in oil, tech products or autos.. look no further than the stock market. It is a bubble though a better analogy is one of those bubble pipes kids use which create bubble upon bubble each bursting a little then reforming new bubbles. the Last consideration is value. After all we're at 27x's SP next year PE. Some stocks have no relation to reality, they're just play things for trading. Look for higher markets on lower interest rates with increased volatility due to more slosh in the system. Broadening formations, we could retest.. in other words Tom everyone is going to be shooting for TA limits. Jim