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FROSTY FUTURES FEBRUARY 20, 2003
DOW R=7960; 8040; 8090. S=7870; 7800; 7725.
SPX R=846; 851; 865. S=836; 825; 815.
NDX R=1009; 1017; 1022; 1040. S=999; 990; 975.
MAR TBOND R=11328; 11408; 11418. S=11313; 11302; 11226.
APR GOLD R=355; 259; 366. S=352 348; 342.
MAY SILVER R=469. S=460; 456; 451.
MAY CRUDE R=3400; 3450; 3540. S=3330; 3280; 3250; 3210.
MAR DOLLAR R=9980; 100.25; 11.75. S=99.5; 99.0; 98.8.
MAY BEANS R=570; 575; 579; 587. S=565; 556.
MAY WHEAT R=337; 343; 348. S=327; 324; 320.
INDICES
All stock indices are in a pattern of consolidation. This week’s end may
be the end of a three-day corrective move preceding a move to higher ground but
there is no certainty to that. One can’t tell from one day to the next what to
expect out of the folks who really move the markets. I keep remonstrating you to
"follow the money" but when the money doesn’t do anything there isn’t much for
you to follow. So I am going to take a step back and write about a subject you
would not normally expect. That is, the World Trade Organization (WTO), the
General Agreement on Tariffs and Trade (GATT) and the North American Free Trade
Agreement (NAFTA). Some of you are, undoubtedly, more familiar with what’s going
on in the world than am I because I truly follow the money, by chart formations
and a few other things, not by keeping up with rhetoric from either the news
talking heads or our political leaders. Lies, damn lies and statistics are about
the only things we get from either source. But to the point, in the beginning
there was the idea of a world trade organization that would help to coordinate
supply functions and demand functions with a worldview. I can remember
discussing with my clients the efficacy of such an arrangement, in spite of its
shortcomings relative to reducing the standard of living for us in the United
States. But, as good Christians, Jews, moral persons in general, it was good to
accept a little lower standard of living if the underdeveloped countries
populations could have access to capital, production and profits. And therein is
the rub. WE in the US have accepted a lower standard of living, higher
unemployment, a stock market debacle, hugely more expensive healthcare, etc. And
for what? Are the people of the old Soviet Union doing any better? What about
Central America? For what have we made these sacrifices? It appears we have made
these sacrifices for the benefit of the richest one-half of one per cent of the
populations in the richest countries. The Russian Mafia rules Russian business.
And the Russians prefer to let them rather than let British Petroleum come in
and take over the oil pipelines. What does that tell you? We have let
multinational corporations get so powerful they can tell the governments of the
US and Great Britain, Japan, Germany, France, et al, exactly what to do and when
to do it, OR ELSE. So what can be done? Rather than be difficult, I will make it
simple. The structure of the entity called a "Corporation" must be changed.
Anti-trust laws must be updated and made to fit the problems as they exist
today. Challenges from lobbyists must be countered with direct confrontation to
expose weak politicians. Media will not help, at least not the major media that
is supported by advertising dollars from the multinationals. So you have to take
the initiative. You, as one person, going to your neighborhood grassroots
meetings whether they are Republican or Democrat or Independent or whatever they
are, have to get aggressive. DO IT.
METALS
Maybe a forty-five dollar break is sufficient to stimulate buyers back
into the gold market. I expect to see that to fruition, but is only good for us
if we are long gold. It does not bode well for the value of either of our
currencies, the greenback or a stock certificate. An interesting note from the
earnings front this week as Barrick mines announced in their statements that
they had fired the CEO and are prepared to deliver actual silver against some of
their short hedges and payoff in cash the balance owed. This signals a certain
change in their hedge strategy relative to silver. And points yet another finger
in the direction of ill winds. For two years we have been successful using the
strategy of buying gold, one contract at a time, every ten-bucks down or every
five-bucks up and never repeating a position. It may be time to add silver to
the list.
CURRENCY
The Dollar is trading sideways in a range from 99 to 101, or so. Given
what we have seen there is no way to determine if the Dollar is going to be
weaker or stronger than other paper-backed currencies. So just take the patterns
one at a time, keep your targets relatively humble and stops close.
CATTLE
I dare say that the last week in December, January and the first week of
February will have been the best time of the year for cattlemen and beef
traders. At least for the bulls. How much there is to be made between now and
August on the short side remains to be seen, but were I you, I would sell the
rallies from now until well into the summer. How much of rally may we expect? It
is reasonable to expect to see attempts during the next several weeks to close
the gap on the charts from the roll of Feb to April. If the rally can close the
gap feeders will follow pretty close but as it stands now, bankers are after
feeders to borrow money to feed and, as usual, are late because you can’t make
any money on finished cattle now paying what is being asked for feeders. Go
somewhere else.
ENERGY
You were warned, readers, about the spreads reversing in this sector. So
you shouldn’t have been caught with your pants down on this break. Now I saved
you from that but for the answer to the question: What have you done for me
lately? I must confess I don’t know what to do at this exact juncture. But if I
see something, or hear of something I will let you know.
GRAIN
Corn, I don’t know. Wheat appears to be building a big head and shoulders
bottom. On the May contract a break through recent consolidation might lead to a
rally of some considerable measure, maybe 20-cents, maybe 50-cents. Beans you
have to take one pattern at a time. The crop down in Brazil and Argentina is
just huge. I know that they are telling us that demand is sufficient to use it
all, but I don’t believe it.
SOFTS
Cocoa is reflecting politics. Coffee has some support between 59-56.
Resistance is up near 65. Sugar is still attempting to reach that 940 target. I
don’t have a clue what will happen when it gets there. Good volume on that big
up day in cotton leads me to believe that 54 is due to be tested. Support
between 51-50 should hold if it is even tested before 54 gets tapped. I’ll just
throw in a reminder to buy a couple of cheap May OJ calls and let them ride.
It’s only money. Remember OJ is $1.50 per point so even if you find one that is
selling for 300 points, it only adds up to $450 (plus the juice). If lumber can
close above $300, buy the first 10 or 15 buck pullback. It could be on the way
to 330 or even 380. But take a look at a monthly chart before making any
decision.
CONTACT ME: williamfrost@comcast.net, www.frostyfutures.com
Or call 800 825 0109, code 04, or 615 331 8567.
Trading futures is for individuals willing to accept greater risk for the
opportunity for greater rewards. Only speculative capital should be used.
Information contained herein is reliable only to the degree sources of data are
reliable therefore no guarantees are made as to accuracy of figures. Nothing
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