1997 SPREAD INVESTMENT LETTER

JANUARY	FEBRUARY
Time to return to the currency complex where we haven't been since the $29,000 DM / JY winner in the May, 1995 letter. This time, we buy the Canadian Dollar / sell the Australian Dollar on a simple trendline break. The ensuing move is worth about $4,400.	Time to consider a stock market top. If it occurs, this S&P 500 / NYSE spread " . . . will cascade precipitously". The March break is worth about $15,000.
MARCH	APRIL
We always like to consider the grain complex in the spring. This corn / wheat spread may have wound up about flat, but there was a big, deep hole in between. Even the "scale traders" would have been stressed to stay with this one unless adequately capitalized.	In April, we focus on the Russell 2000 / S&P 500 spread, recommending it at the -45000 level (see the horizontal line in the chart) just in time to catch the $25,000, two-month increase which reverses a long term downtrend. Although the spread eventually makes new lows later in the year, plenty of opportunity was provided to protect profits and move up stops.  The remaining spreads from May, 1997 forward are still open.