FROSTY FUTURES APRIL 25, 2003

TECH DATA FOR FRIDAY

DOW R=8490; 8526; 8610. S=8395; 8350; 8260.

SPX R=920; 923; 932. S=905; 900; 895.

NDX R=1118; 1135. S=1097; 1090; 1081.

USM R=11318; 11402; 11409. S=11224; 11214; 11126.

GCM R=338; 342; 347. S=332; 327; 323.

SIN R=469; 475. S=462; 458; 455; 448.

DXM R=9910; 9940; 9970. S=9840; 9810; 9760.

CLM R=2700; 2790; 2820. S=2620; 2555; 2500.

SN R=609; 612; 618. S=600; 594; 583.

WN R=295; 302; 304. S=288; 285; 282.

INDICES

In spite of weak, but positive, earnings reports stock indices have remained relatively strong. I won’t tell you how to think, but I think that overhead resistance is going to be chewed away before long. Listening to some of the brokerage firm’s put out buy, sell and hold recommendations one might be tempted to believe the current pattern is more distributive in nature rather than accumulative. But like the pattern I mentioned to you week before last being mistaken for a double-top so I believe that accumulation is taking place rather than distribution. But everyone is entitled to an opinion. The charts will tell us what the money is doing so follow them, don’t be afraid to make a commitment and always use stops. As far as targets are concerned, if the Dow can remove overhead near the 8525 level a run to 9000 is next. On SPX 960 needs to be defeated to establish a target of 1050-1110. Re NDX closes above 1160 will allow 1350 to be targeted. But we will take things a step at a time and see what happens, participate where we can and once again, use stops.

INTEREST RATES

I asked myself why the bond chart looks like it does relative to stock index charts? My answer is that I think the bond got oversold and is bouncing in a realignment of comparative value. More important, I think, is the fact that bonds did get oversold. That tells me that decision-makers that have a ton of money didn’t see much to gain in holding fixed income instruments and wanted something else. Note that gold and silver rallied some this week also. I remain of the opinion that bonds should be approached from the sell side on rallies. But if you are a contrarian then by all means buy breaks. Bonds are a pretty good trending market so either bias may be traded successfully.

METALS

A bottom formation is being hammered out on gold charts. It is not particularly strong or convincing, but it does exist. Resistance at 341 needs to be challenged and removed to fulfill projections of a bottom. Resistance for silver prices lies near 475. Once breached a target of 495 comes into play. Copper still appears to be attempting to test support under 7000. Maybe 6900 will hold. Keep in mind that large copper traders are trying to convince Chilean mine operators to cut production because stocks are large. This will be supportive to copper prices if production is cut, but it should set fire to the silver market, a by-product of copper mining. Silver stocks are being reduced and the outline for some inflation is now visible to gold gurus.

CURRENCY

Will the Buck stop here? No telling, but it is near support, if one wants to call it that, near 9800. More than likely a trading range will be established in this general area that will be identified by some little pattern, e.g. double bottom, key reversal, bullish engulfing line, etc. Watch the charts.

ENERGY

Wall Street Underground’s guru, Nick the bad boy, is telling his subscribers to sell into rallies in crude oil. His thinking, apparently, is that OPEC will not curtail production, supplies will grow burdensome and price will decline into the teens. He is so adamant that he is telling people not to sell just one contract every dollar down, but rather, if they can afford to take the chance, sell two at a time. But in the same breath he warns of imminent backlash. So there you have it. I suggest you trade the crude market from the shortside on rallies, but take profits after large breaks and resell the bounces. Don’t get over exited. There is lots of money to be made in energy so pick your spots and play the game.

CATTLE

It would appear that the cattle market peaked this year in the early February period. The caveat is the deep discount deferred contracts, especially summer contracts, have to cash prices. But as all experienced cattle traders know, cash prices can plummet much faster than futures, because of daily price limits placed on futures. So the configuration extant on futures is telling us that "the market" is expecting either a drop in demand or increase in supply of significant proportions. Feeders might be spreadable but overall if live contracts go down, so will feeders.

GRAIN

The double top in beans was taken out with a flurry but no follow through. A blow-off top was defined the next day with an inside trade pattern and subsequently a drop. I remain bearish beans, but as you can see the traders on the floor can make it uncomfortable for small traders to hold positions. I can’t see corn or wheat making any big moves if beans begin to break significantly, but there should be some good spread opportunities for those not greedy.

SOFTS

Cocoa is drifting, which would normally indicate a bias to the bearish side of the coin. However, political unrest still exists and that makes it difficult. The 6450 level is holding on July coffee. Bulls will be keeping there eye on that level and will want to see a continuation of strength off that level to hold long positions. Sugar traders, or those of you looking for a trade, may want to establish some short positions on the July contract with stops above 775. Closes below 744 will stimulate more selling. You should watch the July cotton contract for action as it nears 5750-5700 level for signs or signals. OJ, once again is building a support base. Apparently sufficient stocks of concentrate are available in warehouses to overcome shortfalls resulting from last winter’s freeze. Competition from Brazil may also be playing a part in the failure to rally off the freeze event. But OJ is one of those markets that just rocks along until one day, without rhyme or reason just explodes or drops like a rock.

CONTACT ME: www.frostyfutures.com or williamfrost@comcast.net

Call: 800 825 0109, code 04 or 615 331 8567

Trading futures is for individuals willing to accept greater risk for the opportunity of greater reward. Only speculative capital should be used. Information provided is garnered from sources believed reliable but no independent verification has been made therefore no guarantees as to accuracy of data is 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.