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FROSTY FUTURES JANUARY 23, 2003
INDICES
The drop in the indices lost momentum today and was able to bounce. It was not
impressive. The drop coming when it did is a bad sign of things to come. We had
some upside momentum in psychology reflected by price action. This week’s drop
just about killed that. So, what now? As a guide use the following ranges as
indicators of things to come next week. For Dow action, if tomorrow’s (Friday)
close is above 8490 or below 8255 use that as an indicator for follow-through.
For S&P action the parameters are 906 and 876. And for the NDX use 1052 and
1004. Other than that all I can share with you is that the guy who has been the
most right, as far as I know, keeps talking doomsday. I frigging hate it, but I
can’t fight the tape.
INTEREST RATES
Naturally interest rates are going to reflect the inverse of the intangible
market. So the externals range potential for tomorrow on the March Tbond is
11306 down to 11020.
METALS
Gold exceeded its technical target of 360 by cutting through to, almost, 369
before running out of gas. I took some profits off the table today but suggest
continuing to honor the system that has been successful going into the third
year now. That being to start your program with one contract then adding one
either every five-dollars up and every ten-dollars down, but never repeat a
position. I have taken the extra precaution of taking profits off the table
every so often so that we are not caught with a bag full when this trend ends
and all profits are wiped out at one fell swoop. Greed is a terrible thing and
trying to prove one’s genius is catastrophe wrapped in vanity. Silver will catch
on eventually but I can’t tell you when. The fact that gold’s dramatic rally hit
a point of resistance today could be the reason for the selloff. Ditto copper,
although copper’s rise in price was one of the indicators I was using to justify
my bullish bias on stocks.
CURRENCY
The Dollar is in a downtrend. Traders who think that near par is a point from
which a reversal is bound to occur may be wishful thinking. You could be 500
points wrong.
CATTLE
A weaker buck and good demand is validating the seasonal trend in this market.
For the first time in over two years the profit potential looks very positive
for feeding cattle. There is lots of activity on the part of Kansas farm folks
relative to this market. On a recent trip most conversation in the coffee shops
was centered on government programs and the positive outlook for cattle. Hope
springs eternal in the breast of the optimists, know what I mean?
ENERGY
Crude is consolidating its recent gains. Conflicting signs have traders
bumfuzzled for the time being. On one hand Venezuela may be getting closer to
beginning production. On the other hand a war in Iraq and a failure to get
things going in Venezuela could combine to produce the greatest energy shortage
we have ever experienced. FOLLOW THE MONEY. Don’t be caught up in the rhetoric.
Support for March crude is down near 30.00-29.50. Nat gas is unregulated; supply
stats, very unreliable, show a decline in volume. Don’t fight it.
GRAINS
All grains are trying to show some potential to rally. The one with the best
real position is having the toughest time. Wheat just continues to get pounded.
To me this is a sign of weak hands entering the market before strong hands come
in. This being recognized, the large floor traders just pound it and will
continue to do so until some really strong money comes in and kicks their asses.
Beans don’t show much potential for any sustained rally because of the huge crop
in Brazil and Argentina. So far, crop development is OK. Last week’s bullish
engulfing line on the March wheat daily chart remains a valid bullish signal,
but it will take more than this one signal, apparently, to give strong hands
conviction enough to come in. Corn is a sleeper. Great demand from livestock
feeders is a strong point.
SOFTS
For the present it appears to me that coffee is in a trading range from about 74
down to 54. Current prices are too close to resistance to get me fired up. Cocoa
just broke out of a trading range that measures up to its next resistance level
at 2350. Sugar continues to just eck out almost imperceptible gains. But it
doesn’t break. I don’t know what to tell you. If you followed my rec’s in the
past you have your sugar profits, so be satisfied and continue to look elsewhere
for profits. Cotton chart activity isn’t too different from sugar. The bias
remains higher but gains are tough to come by. You should be net long OJ at this
time if you have followed my suggestions. Some one or two months ago we
suggested to you to sell futures and buy call options on a 3:1 basis options to
futures. Then we suggested to you to cover your short futures and let your calls
ride through winter. Tonight temps drop below freezing and remain there for more
than five hours as far south as Okeechobee. My sources down in that area tell me
much of the fruit has been picked and that a helicopter squadron is hovering
over the groves keeping the air moving as the temps drop. New methods may save
the trees, but it is unlikely new growth can be saved in the northern part of
the grove range. Five hours between 28 and 25 degrees is pretty tough to take.
So recognizing that if the big five or six OJ merchants want the price to stay
put, for awhile, it will. But they can’t control it for long if trees are really
damaged. It’s just a trade, so we will see what happens. We are sitting on
paid-for call options and have nothing to lose anymore. What will be, will be.
Lumber is flirting with reversing its secular bear trend. A failure here will
stimulate market bears around the horn.
CONTACT ME: By calling 800 825 0109, code 04 or 615 331 8567.
Trading futures is for individuals willing to assume greater risk for the
opportunity of greater rewards. Only speculative capital should be used.
Information contained herein is believed reliable but source have not been
checked for accuracy so there is no guarantee implied. Ideas and suggestions are the opinion of the writer and are subject to change at any time. Nothing contained herein is to be construed to be a solicitation to
trade futures or options. Hedgers should have a defined plan.
TECH DATA FOR FRIDAY
DOW R=8390; 8450; 8490. S=8320; 8255.
SPX R=891; 899; 906. S=885; 876.
NDX R=1042; 1052. S=1025; 1015; 1004.
MAR TBOND R=11200; 11216; 11306. S=11112; 11102; 11020.
APR GOLD R=369; 373. S=361; 358; 354.
MAR SILVER R=491; 494; 510. S=476; 471.
MAR CRUDE R=3300; 3350. S=3160; 3050; 3005.
MAR DOLLAR R=10050; 10080; 10125. S=10000; 9970.
MAR BEANS R=565; 570; 573. S=557; 553; 545.
MAR WHEAT R=318; 321; 325. S=309; 307; 298. Please pass this along to friends or other traders. |
