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To: Kona who wrote (23486)	2/15/1999 1:53:00 AM
From: IQBAL LATIF	Respond to of 50167

Kona-- I think market is reacting to strong numbers on bonds, for me at the moment we are in non- inflationary growth environemnt, this said the fact remains that if market was unable to get deflation based on which it sold out hard in Oct they now look for inflation..Market is always looking for one excuse or other to check supports, any market which does not form a range basing is a market setting up for a eventual huge fall. This market has seen in clear technical terms three distinctive moves one is from 750 to 890 the second is from 890 to 990 and third mini move fronm 990 to 1130 and 1130 to 1292, market will move in between these ranges for me I have identified this 1192 and 1292 equivalent to that 890-900 support. Looking back at that support you will find in 97 similar news of inflationary presures taking the market down to test 845, than in 98 it was deflation which took the market down to 850 area although on composite we tested at 1320 a two year support. So deflation and inflation stories will keep rattling this market at these highs. The break below 1130 would only come if we have fundamental change in economic story. As far as we keep getting strong economic numbers on back these numbers the profits will justify markets at these levels of 1130 and 1292, the day we see inflation creeping up and we see Japan and Europe rising from slumber, we may need to short US markets, as I think that global turn around would be very positive for commodities and will lead to some price presures in US. US can continue this pace of economic activity as far as Europe remains tied up in its structural problems.. and Japan fails to find solution to its consumers unwillingness to spend.. As global engines get going these numbers in US would be unsustainable, however right now as commodity prices are under pressure and other indicators are still demanding ECB to cut rates so as ignite demand we are alright with AG,, I think global situation and yield curve differentials in terms of liquidity still warrant lower short term rates,I would be a buyer of bonds at 122 level and a seller at 131.. Productivity gains in US are also help keeping inflationary presures from building up, hence in absence of any structural problems in US I would assume bonds a buy at supports and sell at resistance. In the end for me markets are about small levels to trade daily and establisihing a strategy for a long side trades on major supports or break of major resistance, likewise exiting at break of major support and failure to breach a major resistance are indicators I try ot trade on.. These intermediate sounds for me is kind of normal market movement at these levels. A bull market has to retrace if it needs to go forward.