4th Quarter Outlooks - October 1, 2008

FX OVERVIEW: The big story in Q3 was the major shifts in quarterly trend in the USD – bullish reversals vs. Pound, Euro and Aussie; the neutral upturn vs. Swiss and bullish lean in trend vs. CAD. Together with bullish monthly trends, those turns are expected to force further extension to yearly or more distant Q4 resistance. Minimum targets for Q4 are 1.1695CH, 1.6705 in Cable; 1.3830 in Euro (with downside below to 1.3095); 1.1229/1.1319CAD and .7410 in Aussie (with gap below to .6561). The one cross that didn’t move, $/JPY, has a breakout-type setup for both Oct and Q4. Above 107.36/64 points to 112.54/77; under 105.42 projects to 99.66 and 98.36.(continued in subscribers area)

STOCK/BOND OVERVIEW: Quarterly trend remains bullish in Treasuries, but two sideways quarters in a row have taken the edge off and leave an overall neutral setup. Wide boundaries project ranges for Q4 from: 4.093 back to 4.918 in bonds; 3.318/228 to 4.243 in 10s; 2.335/263 to 3.375 in 5s; and 1.16 to 2.55 in 2s (with an initial Q4 hurdle at 1.478). Monthly trend does lean bullish for October, but with a tricky, breakout-type initial setups in everything but 2s – which project to 1.478. Stocks are trend down on both the Oct and Q4 charts, with no support until 965/940. The aggressive resistance is Oct/Q4 zone at 1181.67/1186.06; the higher Q4 zone is 1262/1271.(continued in subscribers area)