The Penny King's Free and Clear M&A Fund

[thepennyking]

An Interesting Newsletter from Cleartrade:


[e-mail] wrote:
> Date: Sun, 24 Sep 2000 19:34:56 -0400
> To: [e-mail]
> From: [e-mail]
> Subject: ClearTrade Commodity Newsletter 09/24/00
>
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> ******************************************
> CLEARTRADE COMMODITIES
> PROACTIVE WEEKLY
> NEWSLETTER
> SEPTEMBER 24 ,2000
>
> ******************************************
>
>
>
> Contents: [scroll down for details]
> -------------------
> WELCOME TO CLEARTRADE WEEKLY NEWSLETTER
> =================================================
> TECH TALK
> =================================================
> HEARD ON STREET
> =================================================
> WEEKLY TRADING FOCUS
> =================================================
> STRATEGY CENTER
> =================================================
> SEASONAL TENDENCIES FOR SOME COMMODITIES
> =================================================
> FUTURES FUNDAMENTALS-
> From Optima Investment Research
> =================================================
> *** SPECIAL OFFER ***
> Daily Recommendations FREE Trial
> http://cleartrade.com/visitor.htm#signup
> ***************************************************
>
> WHAT WOULD YOU LIKE TO READ ABOUT?
> We welcome your comments and suggestions. Tell us
> what
> we can do to make this eNewsletter more useful for
> you.
> Send your feedback to: [e-mail]
>
> ==================================================
> WELCOME TO CLEARTRADE WEEKLY NEWSLETTER
> ==================================================
>
> Our goal is to provide up to date information, recap
> the past week's news and technical events preparing
> for Mondays trading. ClearTrade Veteran Traders will
> prepare technical Analysis in selected market groups
> when opportunity presents itself. We at ClearTrade
> hope Traders find our new web site unique in it's
> structure a " Total Traders Resource". ClearTrade
> strives to provide tools to help Traders make
> logical decisions in order to spot the best
> opportunities to make money.
>
> ====================================================
> TECH TALK BY SCOTT R. JOSS **(C.T.A)
> ====================================================
>
> UPDATE: LOSS ACCEPTED
>
> CRUDE OIL:
>
> Crude Oil November 3100 puts were bought by
> ClearTrade clients at .62 ($620)on 9/7/00 with a
> stop out of .32 (risk of $300).
>
> The puts on 9/14/00 had reached a high of 1.12
> (potential profit of $500) before reversing this
> week and reaching a low of .30. ClearTrade's stops
> were activated at .33 for a loss of $290 on 9/21/00.
>
>
> This was a heartbreaker as the Crude Oil market and
> puts have since reversed with the decision of the
> administration to release reserves.
>
> As traders should remember 'discipline was
> maintained' on stop losses.
>
> CRUDE CHART:
> http://www.cleartrade.com/c_energies.htm
>
>
--------------------------------------------------------
> UPDATE: PROFITS TAKEN
>
> MARCH SUGAR:
>
> As described in last week's newsletter, ClearTrade
> was looking to establish a further short position in
> the Sugar market. We were correlating selling March
> Sugar when the October reached near the 9.94 level.
>
> On 9/19/00 near the close, ClearTrade established
> short positions at 9.72 in March Sugar with a stop
> at 10.25 (risk of $593.60)-- with a target of 9.07.
>
> On 9/20 Sugar opened lower and pushed down to first
> support of 9.30. Clients were contacted and profits
> were taken at the 9.32 levels.
>
> On 9/21/00 Sugar opened lower again and pushed down
> to our objective trading 9.00.
>
> SUGAR CHART: http://www.cleartrade.com/c_softs.htm
>
>
---------------------------------------------------------
> UPDATE: PROFITS TAKEN - ESTABLISHING NEW POSITIONS
>
> DECEMBER US 30 YR. BONDS:
>
> In our last newsletter, ClearTrade described the
> TRIPLE match of a sell in the Bonds. On 9/14/00 a
> daily sell signal at 99'21 was given and a weekly
> sell signal at 99'24 was given, prompting ClearTrade
> to sell futures at 99'22 - taking profits at 99'12
> ($312.50).
>
> Once 99'02 was penetrated, clients were contacted to
> buy 99'00 puts at .63 ($984.37) and 98'00 puts at
> .39 ($609.37).
>
> On 9/15/00 the Bonds gave a monthly sell signal
> where ClearTrade added on to its client's positions,
> buying 98'00 puts at .56 ($875).
>
> ClearTrade's first objective of 97'21 was fulfilled
> on 9/18/00 and profits were taken.
>
> STRATEGY:
>
> ClearTrade's second objective will be 96'07 as long
> as the Bonds continue
> to CLOSE below the monthly sell signal of 98'13.
> Look to establish a 97'00 November put position if
> this situation continues.
>
> TREASURY BOND CHART:
> http://www.cleartrade.com/c_financials.htm
>
>
------------------------------------------------------
> UPDATE: POSITIONS ESTABLISHED
>
> NOVEMBER SOYBEANS:
>
> ClearTrade was waiting to see if the 481.00 -
> measuring gap described in the last few newsletters
> would hold. The key to the Soybean market is holding
> and not filling this most important gap -- in order
> to complete it's upside projection of 524.00.
>
> If Soybeans fill the 481.00 gap, ClearTrade is
> prepared to sell futures and purchase November
> 475.00 puts, placing our stops above 485.00 - an
> objective of 463.00.
>
> If Soybeans hold the 481.00 gap, the original
> objective 524.00 still holds true.
>
> ClearTrade waited for two consecutive daily
> Recommendation buy signals on 9/20/00 (488.25) and
> 9/22/00 (495.50) to purchase November 500 Soybean
> calls at 12.75 cents ($637.50) with a stop loss
> correlating to the November Soybeans filling the
> 481.00 gap below.
>
> The currency intervention in Europe early Friday
> morning set in motion a
> round of buying in grains and metals based on the
> idea that this represented a major change in the
> fundamental picture. Demand will be better and
> carrying costs cheaper with the US dollar off the
> highs of the recent months. Support also came from
> forecasts for a freeze next week in the northwest
> U.S. soybean belt, along with ongoing reports of
> disappointing yields on some early-harvested fields.
>
>
> SOYBEAN CHART:
> http://www.cleartrade.com/c_grains.htm
>
>
------------------------------------------------------
> UPDATE: PROFITS TAKEN
>
> FINANCIAL INDEXES:
>
> ClearTrade last week went out on a limb and
> expressed our opinion that 'the Financial Indexes'
> would come down hard this last week and challenge
> the monthly lows - which happened to be contract
> lows.
>
> What lead to this assumption was the early monthly
> buy signal September 1st, earnings reports (INTEL
> reported earnings warnings this last week) and a
> technical bearish saucer bottom at the top end of
> the daily
> charts.
>
> As Recommended in our Daily Trade Recommendation,
> ClearTrade clients were advised to sell the S & P
> EMINI on 9/20/00 at 1466.50 looking for monthly lows
> of 1445.25.
>
> FINANCIAL INDEXES CHARTS:
> http://www.cleartrade.com/c_financials.htm
>
>
-----------------------------------------------------
> UPDATE: POSITIONS ESTABLISHED
>
> DECEMBER SILVER:
>
>
> ClearTrade recommended clients establish a long
> position in Silver at 495.00 on the 9/22/00 Daily
> Recommendation.
>
> The Silver appears to be in a consolidation range
> between 486.50 to 575.00 on the weekly continuation
> charts.
>
> December 500 calls were purchased at 12-cents ($600)
> with a stop to correlate the breaking of the 486.50
> level.
>
> If Silver holds the 486.50 level ClearTrade will
> look for Silver to trade up to the 515.00 level
> before consolidating again.
>
> If Silver breaks below 486.50 ClearTrade will
> liquidate long positions and reverse to a short
> position and look for the 458.50 lows from 12/4/98
> and possible lows to 400.00, lows established on
> 7/25/97.
>
> SILVER CHART: http://www.cleartrade.com/c_metals.htm
>
> ----------------------------------------------------
> UPDATE: LOOKING TO RE-ESTABLISH SHORTS
>
> OCTOBER FEEDER CATTLE:
>
> ClearTrade will be looking at the 85.80 to 86.20
> levels for a possible short position. The market is
> trying to recover from the recent fall to the 84.12
> level from its Daily head and shoulders top. We
> expect Feeder Cattle to try and penetrate through
> the original neckline at 85.82.
>
> Shorts established in this sell zone 85.80 to 86.20
> will place stops above the gap of 86.65 established
> on 8/25/00.
>
> Our long-term objective still remains at the 83.00
> level.
>
> FEEDER CATTLE CHART:
> http://www.cleartrade.com/c_meats.htm
>
>
> ==================================================
> HEARD ON STREET
> ==================================================
>
> Intel Shares Plunge After Warning, Sparking Tech
> Sell-Off
>
>
http://www.futuresource.com/ce/www/htdocs/fswrap.shtml?s=fs2&c=30&aid=31927
> --------------------------------------------------
>
> US FX Review: Euro Trims Gains after Intervention
> Vaults It
>
>
http://www.futuresource.com/ce/www/htdocs/fswrap.shtml?s=fs2&c=33&aid=31957
> --------------------------------------------------
>
> Summers: US Policy Unchanged; Strong Dlr in National
> Interest
>
>
http://www.futuresource.com/ce/www/htdocs/fswrap.shtml?s=fs2&c=30&aid=31913
> --------------------------------------------------
>
> White House: Clinton Continuing to Review SPR Oil
> Release
>
>
http://www.futuresource.com/ce/www/htdocs/fswrap.shtml?s=fs2&c=30&aid=31909
> ---------------------------------------------------
>
> US grains-Trucks tight at harvest due to fuel
>
>
http://www.commods.reuters.com/news/grains/nN22620089.html
> ---------------------------------------------------
>
> CME traders call USDA hog data slightly bearish
>
>
http://www.commods.reuters.com/news/grains/nN22613102.html
> ---------------------------------------------------
>
> Wet weekend and a cooldown seen for U.S. Midwest
>
>
http://www.commods.reuters.com/news/grains/nN22618137.html
>
>
>
====================================================================
> WEEKLY TRADING FOCUS
> By Florida ClearTrade Senior Trader Raymond Franklin
>
>
====================================================================
>
> For the last few weeks I have been expecting a
> strong rally in the Swiss Franc which would most
> likely be triggered by falling Crude Oil prices.
> What I did not anticipate was both markets starting
> their moves based on government intervention.
> Therefore as we move forward you should expect
> extreme volatility while the Currency and Energy
> markets try to adjust to the uncertainty of
> intervention within a free market system.
>
> I believe Crude Oil was near completion of an
> important top, which would lead to a seasonal
> correction of about 15% or approximately $5 in the
> spot Crude Oil price. In the past tops were
> completed by a surprising API report showing an
> increase of 5 million barrels or more in Crude Oil
> inventory levels. A seasonal increase in Crude Oil
> inventory levels is normal for this time of the year
> and Fridays surprise announcement has the look of a
> political ploy to gain credit for something which a
> free market was about to accomplish on it's own.
>
> Sunday night Crude Oil should continue to sell-off
> and than gap down from it's 32.68 close for the
> November contract at the opening of trading Monday
> morning on the New York Mercantile exchange. If
> Crude Oil does not gap down Monday morning beware of
> a possible bear trap and a whipsaw rally back to new
> highs in the November contract.
>
> The Swiss Franc has probably made at least a short
> term low with Fridays intervention in the Euro
> Currency and Clinton's 30 million - barrel release
> of strategic oil reserves for the coming month. The
> one caveat would be if Crude Oil for whatever reason
> reverses back to the upside early next week. In the
> past the free market likes to test the resolve of
> central bank intervention with at least one retest
> of the previous lows. The question I have is whether
> the expected retest will come in the near term or
> sometime after the election. But in either case I
> believe Crude Oil will remain the key to currency
> price direction for the rest of the year.
>
> The price action for November Orange Juice last week
> increased the possibility of a sharp price drop in
> the near term. Please review our 9/10 newsletter for
> my initial comments on Orange Juice and why I would
> be a recommended buyer of November Orange Juice near
> 65 cents.
>
> October Feeder Cattle appears to close to the
> completion of a wave 4 formation which should lead
> to a 5th wave down to approximately 83 cents. My
> clients are already positioned with synthetic puts
> for a risk of $225 per contract and a breakeven
> point of 85.55. For the coming week I am
> recommending additional shorts on the October
> contract near 86.50 with stops placed above 87
> cents.
>
> The final market which I will focus on this week is
> December Cotton which appears to have a major double
> top formation in place from it's 5/25 and 8/29
> highs. A small gap left behind from 65.80 to 66.05
> in trading on 9/11 to 9/12 would be a very
> attractive selling area if reached. A more
> aggressive entry would be near 65 cents early in the
> week which would be near both the 20 day moving
> average and a 50% retracement from Friday's low to
> it's 8/29 high.
>
> As always if you have any questions concerning this
> weeks report or any other markets of interest call
> me, Ray Franklin at 877-442-8060.
>
>
===================================================================
> STRATEGY CENTER
> By Scott R. Joss **(CTA)
>
===================================================================
>
> A LOOK AT DAILY TRADING
> RECOMMENDATIONS
>
> Traders who receive ClearTrade's Daily
> Recommendations should not
> arbitrarily select and act on any one recommendation
> simply because it is listed as a `recommendation'.
> The decision to act should be based on a number of
> factors.
>
> The points that I consider (and what ALL traders
> should be thinking about) when reviewing a daily
> recommendation are:
>
> 1) Is the product in a heavily congested area on the
> daily charts?
>
> (Indicating shallow profits, or not taking the trade
> until the true direction is established by the
> weekly breakouts).
>
> 2) Where is the product on the weekly chart?
>
> (Is it near the weeks highs or lows where the
> probability of continuation is evident and might
> carry the product on to its monthly breakout).
>
> 3) Where is the product on the monthly chart?
>
> (Is it in the middle of the range - not yet
> determining a particular direction)?
>
> 4) What are the probabilities that the product will
> take `either side out' (highs or lows) of all the
> above?
>
> (Matching the daily, weekly and monthly breakouts is
> important in establishing a high 90% chance of
> momentum breakout in one direction or another)
>
> 5) Where are the support and resistance levels?
>
> (To determine the entry of the product, stop loss
> and objective - in hard numbers).
>
> When I speak with my clients each morning, I try to
> give them the flavor of the markets `in a capsule'.
> Recommending the trend direction -which will let
> them know if we are playing the buy side, sell side,
> either sides, or not acting on the recommendation at
> all.
>
> I try, in these weekly 'newsletters' and daily,
> weekly and monthly 'recommendations' (sent to all
> clients), to give a sense of direction - and to help
> the client to make a more `informed' decision in a
> risky environment. These items, in conjunction with
> the daily, weekly and monthly 'charts', will
> determine direction, risk and objective.
>
> I may initially think `all is well' matching the
> above in taking a position. However, I then pause to
> consider... `is the potential risk worth the
> reward'?
>
> This may seem overwhelming to some - but not to the
> professional trader. We, like doctors, have to keep
> calm in the face of chaos and must make a quick
> diagnosis and act decisively toward achieving a
> `cure'..... PROFITS.
>
> As traders know, Futures are fast moving and high
> leverage instruments that must be recalculated
> moment by moment - relaying direction, risk and
> objective to the client.
>
> Yes - there will be losses... but keeping them to
> minimum increases the trader's probability of strong
> gains which should outweigh the small losses.
>
> ==================================================
> SEASONAL TENDENCIES FOR SOME COMMODITIES
> ==================================================
>
> NOTE: LOOK AT THE SEPTEMBER SEASONALS - OCTOBER
> SEASONALS
>
> SOYBEANS:
>
>
http://www.site-by-site.com/usa/futures/noframes/charts/Grain%20Complex%20Future
s.htm#Soybeans
>
> ----------------------
> FEEDER CATTLE:
>
>
http://www.site-by-site.com/usa/futures/noframes/charts/Meat_Futures.htm#Feeder_
Cattle
>
> ---------------------
>
> SILVER:
>
>
http://www.site-by-site.com/usa/futures/noframes/charts/Metals_Futures.htm#Silve
r
>
>
>
===================================================================
>
===================================================================
>
> FUTURE
> FUNDAMENTALS
> MONDAY
> 9/25/00
>
>
====================================================================
>
====================================================================
>
> S&P 500
> US Stock Market -- The major US stock indexes last
> Friday gapped sharply lower on the opening and then
> spent the entire session rallying to finally settle
> mixed. US Stock Index Settles: US Stock Index
> Settles: Dow Industrials +81.85 at 10847.37; DJZ00
> +115 at 11,010; Dow Utilities +8.73 at 375.16; OEX
> -6.31 at 774.08; S&P 500 -.33 at 1448.72; SPZ00
> -1.00 at 1468.50; NASDAQ Composite -25.16 at
> 3803.71; Russell 2000 +4.46 at 518.81.
>
> The Russell 2000 and the Dow rose 0.9% and 0.8%,
> respectively, last Friday while the S&P 500 was
> essentially unchanged and the NASDAQ was down 0.7%.
> On a year-to-date basis, the Russell 2000 is up 2.8%
> while the rest of the major indexes remain in
> negative territory. The NASDAQ is down 6.5%, the Dow
> is off 5.7% and the S&P 500 is down 1.4%. The
> Wilshire 5000, an index of the entire US stock
> market, is down 1.0% for the year.
>
> Stock market breadth was only mildly bearish last
> Friday and pointed to strength in the broader
> market. Declining issues (1,518) led advancing
> issues (1,340) by a narrow 9 to 8 margin. Of the S&P
> 500's 87 sub-indexes, 58 rose while 28 fell. Of the
> 500 stocks in the index, 278 rose while 207 fell.
> Volume on the NYSE was very heavy at 1.167 billion
> shares with 50% of that volume occurring in
> declining shares.
>
> The main impetus behind last Friday's plunge in the
> US stock market was the surprise sales warning from
> Intel. Immediately after last Thursday's close, the
> company said that Q3 sales would fall short of
> forecasts due to weaker European demand. The company
> said that total Q3 sales would increase 3-5% q/q
> which was less than half of some estimates for 10%
> growth. European sales accounted for almost a
> quarter of total sales in Q2. Further bad news came
> in the form of a reduction in Intel's Q3 gross
> margin forecast. The company did not say whether or
> not it expected to meet the current consensus Q3
> earnings forecast of 41 cents per share.
>
> Investor reaction to the announcement was swift not
> just because of the disappointing news but also due
> to its timing. Just 1-1/2 weeks ago, Intel said that
> it was comfortable with sales projection made in
> July, the rosiest Q3 estimates made in five years.
> Institutional money, however, has been flowing out
> of the stock for months now according to an analysis
> of block trading volume and the announcement
> destroyed most of the remaining bullish sentiment
> that existed following the 17% slide in the 2-1/2
> weeks through last Thursday's close.
>
> The impact of the announcement sent the
> semiconductor stocks into a tailspin (the
> Philadelphia Semiconductor Index fell 5.9%) but the
> news also had a very negative impact on the rest of
> the technology sector as the warning provided
> confirmation to recent speculation that PC sales in
> general are slowing. That dragged down the computer
> stocks (Dell lost 5.3%) as well as the networking
> stocks (Lucent lost 5.2%). In addition, the impact
> was magnified by Intel's position as a bellwether
> technology issue with a market capitalization that
> still stands at $321.9 billion making it the fourth
> biggest component of the S&P 500.
>
> Intel's shares closed down 22.0% at 47-15/16 last
> Friday after posting a 7-1/2 month low of 46-1/2.
> Trading volume set an extraordinary one-day record
> of 308.3 million shares, shattering JDS Uniphase's
> previous record of 200.4 million shares from July 26
> and almost eight times Intel's average daily volume
> over the past month of 39 million shares.
>
> Additional bearish factors included (1) the recent
> rise in the benchmark 10-year Treasury note yield to
> a 2-month high, (2) the strong pace of Q3 earnings
> warnings which are running about 30% ahead of the
> number seen in Q2, (3) technical weakness with the
> S&P 500 and the NASDAQ both posting 1-1/2 month lows
> last Friday, (4) a sell-off in the heavily weighted
> oil stocks as crude prices sagged, and (5)
> expectations that earnings growth for the companies
> in the S&P 500 peaked in Q2 due in part to a
> slowdown in the US economy, the weak euro and
> surging energy costs which add to operating and
> product costs.
>
> Bullish factors: (1) the two day rally in the Dow
> led last Friday by Coca-Cola (+6.6%), Philip Morris
> (+4.2%), and Merck (+4.2%) as investors shifted
> money into stocks with more stable earnings, (2) the
> ability of the broader market to bounce solidly off
> its early lows last Friday, an indication of
> investors' willingness to go bargain hunting outside
> of the technology stocks, and (3) the rally in the
> euro after a round of coordinated intervention which
> may take some of the pressure off of US stocks with
> wide European exposure.
>
---------------------------------------------------------------------
>
> T-Bonds
> US Interest Rates -- Credit market continues to
> focus on effect of oil prices on the economy --
> December T-bonds last Friday edged higher in
> overnight trading and then tailed off through the US
> session to finally settle a bit stronger. Futures
> closes: USZ00 +0-02 at 98-05; TYZ00 +0-070 at
> 99-280; FVZ00 +0-040 at 100-105; TUZ00 +0-025 at
> 100-000; TBZ00 -.015 at 93.945; EDH01 +.0300 at
> 93.4450. Cash closes (3PM NY): cash 30-yr +0-10 at
> 104-23; cash 30-yr yield -.021 at 5.911; cash 10-yr
> +0-10 at 99-11; cash 10-yr yield -.043 at 5.838;
> cash 5-yr +0-05 at 103-11; cash 5-yr yield -.038 at
> 5.917; cash 2-yr +0-040 at 100-050; cash 2-yr yield
> -.036 at 6.052; 3-mo T-bill +.010 at 5.980.
>
> Dec T-bonds last Friday rebounded above last
> Thursday's 2-month low of 97-16 where the contract
> sold off by a total of 3-18/32 points from the
> contract high of 101-02 (9/1/00). The 30-year cash
> bond yield last Friday retreated from last
> Thursday's 2-1/2 month high of 5.981%. On that high
> the yield rebounded by a total of 34.8 bp from the
> 4-1/2 month low of 5.633% (9/1/00). March Euros last
> Friday edged to a new 10-month high of 93.495.
>
> Bullish factors: (1) the plunge in oil prices as the
> White House taps the Strategic Petroleum Reserve,
> (2) anticipation ahead of this week's buyback
> operation as last week's operation totaled $1.5
> billion, much larger than expected, (3) some
> short-covering, and (4) underlying optimism about
> Fed policy given ideas that the recent surge in
> energy prices may brake domestic demand.
>
> Bearish factors: (1) the bout of central bank
> intervention in support of the euro which gave rise
> to concerns about Treasury sales as the banks seek
> to raise dollars to sell in the forex market, (2)
> expectations that the Fed will retain its tightening
> bias at the October 3rd FOMC meeting, (3) underlying
> concerns about energy prices despite last Friday's
> sell-off, and (4) some technical weakness as the
> benchmark bond yield held just below the 6% mark.
>
> The credit market this week will likely key off of
> the behavior of energy prices following last week's
> decision to tap the SPR, as well as the forex market
> following last Friday's bout of coordinated central
> bank intervention in support of the euro. Regarding
> oil prices, the Treasury curve recently responded to
> the surge in energy prices with the long-end selling
> off on inflation concerns and the short-end
> remaining strong on talk about damage to the
> economy. The market will continue to monitor whether
> oil prices will follow-through on the downside due
> to the White House decision to tap the SPR or
> whether the market will eventually consider that to
> be a drop in the bucket and push oil prices higher.
> Regarding economic reports, this week is light and
> the markets will mainly be looking ahead to next
> Monday's NAPM report and next Friday's unemployment
> report.
>
> In the meantime, the behavior of the fed funds
> futures curve continues to suggest that market
> expects the next Fed move to be an easing. The
> December contract last Friday settled at 93.525,
> thereby pointing to a 5.475% funds rate, or a steady
> Fed policy through year-end. However, the April
> contract closed at 93.620, thereby pointing to a
> 6.38% funds rate, or about a 40% chance of a 25 bp
> easing by the end of Q1.
>
--------------------------------------------------------------------
>
> Currencies
> Forex -- Euro/dollar rockets higher as central banks
> intervene -- The dollar last Friday edged lower in
> Asian trading and then plunged as the G7 central
> banks joined the ECB in a bout of coordinated
> intervention in support of the euro. However, the
> dollar retraced about half of those losses through
> the remainder of the day to finally settle sharply
> weaker. Dollar closes (3PM NY): cash dollar index
> -1.82 at 113.47; dlr/yen +1.37 at 108.03; dlr/Swiss
> -.0359 at 1.7297; stlg/dlr +.0230 at 1.4591; USD/CAD
> +.0024 at 1.4889. Euro closes: euro/dlr +.0208 at
> .8788; euro/yen +3.48 at 94.99; euro/Swiss +.0060 at
> 1.5212. Futures closes: DXZ00 -1.66 at 113.34; JYZ00
> -.0125 at .9388; ECZ00 +.02070 at .88260; SFZ00
> +.0116 at .5822; BPZ00 +.0226 at 1.4608; CDZ00
> -.0010 at .6729; ADZ00 +.0000 at .5436.
>
> The dlr/yen last Friday surged to a new 1-month high
> of 108.14 yen where it rebounded by 3.37 yen from
> the 2-1/2 month low of 104.77 (9/7/00) yen. The
> euro/dlr last Friday raced to a new 3-week high of
> 89.92 cents where it rebounded by a total of 5.48
> cents from last Wednesday's record-low mark of 84.44
> cents.
>
> Bearish factors: centered on (1) the surprise bout
> of coordinated central bank intervention in support
> of the euro, (2) short-covering in the euro/dollar
> which climbed to a 3-week high, (3) underlying
> concerns about America's gaping current account
> deficit and the heavy outflow of dollars from the US
> which was put on display by the US trade report
> release last week, and (4) the mixed performance in
> the US stock market.
>
> Bullish factors: (1) long-term technical weakness in
> the euro/dollar which posted a new all-time low last
> Wednesday, (2) some technical buying in the
> dollar/yen which climbed to a new 1-month high of
> 108.14 yen.
>
> In a watershed event last Friday, the ECB led a bout
> of coordinated central bank intervention in support
> of the ailing euro. The ECB acted alone among
> European central banks (the Bundesbank, Bank of
> France, Bank of Italy and other EU-11 state banks
> acted on behalf of the Bank of Japan), and was
> joined by the Bank of Canada, the Bank of England,
> and most importantly, the Fed.
>
> Last Friday marked the first time the US intervened
> in the forex market in more than 2 years, since it
> sold $833 million for yen on June 17, 1998. In a
> joint statement, the ECB said that joint
> intervention was needed due to the "shared concern
> of the potential implications of recent movements in
> the euro and the impact on the world economy."
>
> Clearly, the initial surge in the euro in reaction
> to the central bank purchases suggests that last
> Friday's intervention was somewhat successful. Now,
> the big challenge will be whether last Friday's
> rebound in the euro can stick. The early indications
> are somewhat disappointing as the euro tailed off
> steadily through the US session last Friday, finally
> settling about mid-way between the
> intervention-induced high of 89.92 cents and last
> Wednesday's record low of 84.44 cents.
>
> First, the forex markets will look for an aggressive
> communique out of the G7 meeting on Saturday in
> support of the euro. Secondly, the markets will be
> watchful about any further bout of coordinated
> intervention. The outlook on that score is a bit
> clouded.
>
> Treasury Secretary Summers told reporters last
> Friday that despite intervention to weaken the
> dollar, the US believes a strong dollar is in the
> "national interest." When questioned about those
> clashing beliefs, Mr. Summers refused to comment. He
> also refused to comment on whether the US was
> promised any quid pro quo from the ECB in exchange
> for intervention, such as promises to pursue more
> aggressive reforms of Europe's highly regulated
> labor and product markets. Lastly, he refused
> comment on just what the danger would be to the
> world economy from a weakening euro.
>
> In reality, the main reason that the Clinton
> Administration may have gone along with European
> intervention is that the weak euro is beginning to
> hurt US stocks. It may have been no coincidence that
> US cooperation in intervention came a day after
> Intel lost some $100 billion of market
> capitalization and dragged down the global high-tech
> sector in concert. A number of US stocks have shown
> weakness lately in response to the weak euro and
> lower European profits. In addition, the weak euro
> is putting upward pressure on European import prices
> and that is putting upward pressure on ECB interest
> rates. A weak US stock market is not the type of
> market activity that the Clinton administration
> wants to see ahead of the November elections.
>
> There are risks to the ECB and the euro after last
> Friday's intervention. If the euro simply sinks back
> to last week's lows, the ECB will again come under
> pressure to intervene again. However, assuming that
> last week's intervention and any further euro buying
> operations are sterilized, that is put back into the
> banking system through open market (refinancing)
> operations, the impact of the intervention may not
> stick.
>
> That is especially true since the main force behind
> the prolonged decline in the euro was not
> speculation, but capital flows. In 1999 some 145
> billion euros in capital exited the Euro Zone,
> followed by another 45 billion euros through the
> first half of this year. Moreover, as seen in data
> published by the Chicago Merc, speculators have been
> consistently betting (and losing) on the euro making
> a rebound. Position reports suggest that speculators
> have been relentlessly going long the euro, only to
> be burned by relentless capital flows out of the
> EU-11.
>
> Such flows will be very difficult to reverse through
> intervention alone. This is where the importance of
> pursuing structural reforms to Europe's labor and
> product markets are so important. While some reforms
> have been initiated, included aggressive tax cuts in
> Germany and somewhat aggressive tax cuts in France,
> the rush to cave into blockading truckers and other
> protestors over fuel prices, as well as French
> attempts to harmonize fuel taxes, only serve to
> undercut investor faith in the EU-11.
>
> Still, last Friday's bout of intervention did send a
> message to the markets. To speculators, it may have
> given the green light to go long the euro once
> again. To investors, it may have provided some
> relief to those market participants who were burned
> on the exchange rate on investments in the EU-11.
> Most importantly, it may signal to those on the
> sidelines that the exchange rate risk of holding
> euros has been substantially reduced.
>
---------------------------------------------------------------------
>
> Grains -- The grain complex was higher across the
> board last Friday. The sector continues to find some
> support from the belief that the grain markets are
> technically oversold. Early harvests have pointed to
> some unexpected damage to the soybean crop,
> exacerbated by reports last Friday of a possible
> early frost this week. The rally in the euro was
> also beneficial and improved the pricing of US grain
> products to European buyers. Price gains may be
> limited by the likelihood that farmers will still
> harvest record soybean and corn crops. December corn
> closed up 3-6 cents at a 2-week high settlement of
> 194-0 (+2.0%) as it rose to its highest level since
> posting a contract low of 185-4 on August 11.
> December wheat closed up 3-2 cents at 250-6 (+1.4%)
> after posting a new contract low of 246-0 last
> Thursday. November beans last Friday closed up 4-2
> cents at 496-0 (+1.0%) but remains below the recent
> 3-month high of 515-4 (Sep 5).
>
---------------------------------------------------------------------
>
> Metals -- December gold last Friday closed up $1.60
> at $275.10 (+0.6%) after first posting a 1-1/2 week
> high of $279.20. The contract posted a 1-year low of
> $272.30 last Wednesday and Thursday where it
> extended its 3-month downmove to a total of $31.20
> (10.3%). The gold market opened sharply higher last
> Friday morning in response to the plunge in S&P 500
> futures in Globex trading but the metal was unable
> to hold those gains and sold off for nearly the
> entire session. Further losses in the stock market
> are unlikely to lend the gold market any support.
> What strength there was present during last Friday's
> session was due more to the sell- off in the dollar.
>
>
----------------------------------------------------------------------
>
> Crude Oil
> Energy -- The November crude oil contract last
> Friday closed down $1.32 at a 1-1/2 week low
> settlement of $32.68 (-3.9%), bringing its two day
> loss to a total of 7.3%. On last Wednesday's
> contract high of $36.10, November crude oil was up
> $10.00 (+36.8%) from the July 31st 4-month low of
> $27.10. The all-time high on the weekly-nearest
> chart is $41.15 and that was posted on the eve of
> the Gulf War in 1990.
>
> Expectations that the Clinton Administration would
> release oil from the Strategic Petroleum Reserve
> continued to weigh on oil prices last Friday. After
> the close, those fears became a reality after Energy
> Secretary Bill Richardson announced that President
> Clinton had ordered the release of 30 million
> barrels of oil from the SPR, in line with what
> presidential candidate Al Gore had been calling for.
> The releases will take the form of a swap and will
> be replaced by the companies that take it at a
> premium. The Energy Department will start taking
> bids on Monday.
>
> Whether or not the release will cap oil prices
> remains to be seen. The additional oil was certainly
> factored into the market last Thursday and Friday
> and Monday's session may see an upward bounce. In
> addition, the release of 1 million barrels per day
> amounts to only about a tenth of the average daily
> US consumption rate. Finally, more crude oil on the
> market may do little to lower gasoline and heating
> oil prices, the prices that consumers care about
> most, since refineries are already operating near
> their highest capacity in a year and can do little
> to add more supply.
>
> Furthermore, there should be no doubt that the
> decision to tap the SPR was political in nature. It
> is no coincidence that the operation will wrap up in
> time for the November election. Moreover, the
> operation will have passed by the time the heating
> season in the Northeast (New York State) is in full
> swing.
>
----------------------------------------------------------------------
>
> Meats -- The meats complex was higher across the
> board last Friday with both cattle and hog prices
> ending at multi-week highs. Higher cash prices and a
> pick-up in demand after cattle hit a 1-year low in
> early September fueled last week's rebound in the
> December contract. So far, demand has been strong
> and prices have held up in the face of a
> cattle-on-feed herd that was almost 10% larger y/y
> through the start of September. October live cattle
> ended the session up .425 points at a 1-month high
> settlement of 68.325 (+0.7%). October lean hogs
> closed up .100 cents at a 1-1/2 month high
> settlement of 56.425 (+0.2%). February pork bellies
> settled up .350 cents at a 1-week high settlement of
> 63.400 (+0.6%) as the contract rebounded farther
> above last Tuesday's 5-month low of 60.400.
>
----------------------------------------------------------------------
>
> Softs -- The softs complex was mostly higher last
> Friday with the exception of the November orange
> juice contract which fell 2.20 points to close at
> 71.55 (-3.0%). The December coffee contract settled
> up .20 points at 78.00 (+0.3%) after posting a new
> contract low of 77.40. Coffee has been in an
> extensive downtrend for some time now with the
> latest leg down coming as Latin American countries
> harvest their crop. Coffee supplies in CSCE
> monitored warehouses have tripled so far this year
> to a 6-1/2 month high, sending the price of coffee
> to a 6-year low.
>
----------------------------------------------------------------------
> © Copyright 1982-2000, Optima Investment Research
> Inc.
>
> No responsibility is assumed for the use of this
> material and no express or implied warranties or
> guarantees are made. Facts, opinions and advice are
> current and are subject to change without notice.
> Nothing


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