Bob's Weekly Stock Market Commentary - Week Ending 01/17/97
Bob McCullough
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Peering Into the Market's Future - Week Ending January 17,1997
The stock market had a good week last week. It frequently shrugged off a
weakish bond market, perferring instead to focus on strong earnings
reports.
Almost every drop in stock indices was temporary, with buyers seeking
bargains
during every dip. At times, the dips lasted only a few hours when usually
they
might last for days.
The dollar rose again last week. Its chart is bullish (Hyperlink here for
U.S.
Dollar Chart in original). The dollar index is moving up within an upward
sloping trend channel. It doesn't appear that Japan will be raising its
interest rates anytime soon because of its weak economy, problems in its
banking system, and poorly performing stock market. The German economy is
still weak. The technical picture of the dollar index confirms the
fundamentals that the dollar should continue to rise on an intermediate
term
basis. On days when the U.S. stock and bond markets are strong, that helps
the
dollar also.
Commodity prices dropped last week (Hyperlink here for Commodities Chart in
original). The CRB's chart is neutral. The long term downward trend
channel's
effect is being offset by the shorter term upward trend channel's effects.
Formula Y's plot is neutral.
Short term interest rates were very slightly lower last week. (Eurodollar
prices rise when short term interest rates decrease.) (Hyperlink here for
Eurodollar Chart in original). Short term interest rates are unlikely to
change much until market analysts become convinced that the Fed is going to
cut
or raise short term rates. That looks unlikely to happen soon although
there
is some speculation that the Fed may need to raise short term rates because
of
a recent strong Non-Farm Payrolls Report and consistently strong economic
reports coming out these days.
Bond prices rose slightly last week. (Hyperlink here for Bond Chart in
original). Economic reports are becoming stronger and that's bad for
bonds.
Technically, the bond chart is still bearish. Prices are moving down and
Formula Y has dropped below its moving average.
The S&P 500 index rose last week as we were expecting (Hyperlink here for
S&P500 Chart in original). Its 13 week Formula X oscillator issued a buy
signal several weeks ago and is moving up in a bullish pattern. The 13
week
Least Squares Momentum is extremely positive. Formula Y is now neutral.
Nimble traders can take long positions in the stock market.
Long range fundamentals for the stock market are still good. The economy
continues to grow at a moderate pace without inflation. Use dips to
accumulate
more equities. The long term trend is decidedly up. Short term traders
got a
buy signal several weeks ago.
(Scroll down to get weekly S&P500 Chart in original.)
Bob McCullough
Liberty Research Corporation
Investograph Plus
Email: inv...@libertyresearch.com
Web Site: http://www.libertyresearch.com/
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