FROSTY FUTURES MAY 9, 2003

TECH DATA FOR FRIDAY

DOW R=8590; 8645. S=8450; 8410; 8300.

SPX R=928; 936; 940. S=911; 899; 888.

NDX R=1133; 1138; 1153; 1161. S=1110; 1094; 1085.

USM R=11614; 11620. S=11524; 11504; 11426.

GCM R=350; 353; 358. S=346; 341.

SIN R=482; 490; 495. S=473; 467; 463.

DXM R=9575; 9610; 9665. S=9500; 9450; 9400.

CLN R=2710; 2780; 2840. S=2590; 2550; 2510.

SN R=628; 630; 633; 637. S=616; 608; 606; 603.

WN R=302; 304; 308; 315. S=296; 293; 290.

INDICES

I hope you got short on the call from Wednesday afternoon. Stocks should follow through Friday and, if common patterns are presented, again Monday. While staying as strong as they did Monday through Wednesday bodes well for the bull, it is only too true that a market is stronger longer if it backfills on the way up. If you can observe market action week by week you will notice that this week’s trade could drop all the way down to 8400 and still remain in the upper half of the previous two weeks trading ranges. One reason for the decline is the loss of momentum in the NDQ’s. We need to keep our eye on weakness from this sector. It led on the way up and could lead the way down. However, if it matters, as I warned you last October and March, NDQ will not go anywhere without firm underpinning from the Dow. This is a function of volatility, not value. Keep that in mind.

INTEREST RATES

Anomaly’s galore. Gold and silver rising, stocks strong and interest rates dropping like a rock. Don’t be foolish enough to believe this trend will last for long. Either we have some inflation (gold) or we don’t (low interest rates) but we can’t have both unless that ugly phenom from the past rears its head called stagflation. Everyone loses.

CURRENCY

The buck had a chance to rally today (Thursday) but couldn’t pull it off. I was in good company, I later found out, when I called for a rally, but it didn’t do any good for the time being. Sometimes when the charts present such a solid picture from which to make a flat statement, such as I did, momentum gets the better and the mark is overshot. At this time, I will admit forthrightly, that I was premature. However, markets don’t lie so we will be well served being observant for more signals of imminent reversal in currencies.

CATTLE

There might be another 50 points up from this week’s high left in live cattle. But after that producers better be hedged up. Speculators will start to pile on as boxed beef prices begin to fade even a little. And this is just about the time weights begin to pick up and numbers begin to increase.

ENERGY

July crude should run into some pretty stiff sales around the 2700 area. Unfortunately traders have to play for the closes rather than intra-day action for guidance. This makes for tough trade. But the onus is on the bulls to prove their case. Increased supplies, possible stagflation and existing high prices make a pretty strong argument for selling rallies. There is some interest from speculators for natural gas. I don’t know their thinking, I don’t believe statistics and the charts are totally wacked.

SOFTS

Cocoa is back down on the lower end of its trading range. It has a downward bias and looks like it wants to begin a waterfall pattern. Let the trade stop you into action rather than trying to anticipate it. Maybe political unrest in Ivory Coast is settling down or maybe it is just hiding. Colder weather in the coffee mountains of Brazil and Columbia have stimulated traders to establish a new trading range between July 6700-7100. Absent freeze a decline will probably follow from here. Just remember that 7100 is not a great freeze premium. Sugar has begun a steady decline and may tumble right on down to the 600 level. War is over, stocks are large, a decline would be the natural thing. Ditto cotton, with support being very scattered from 4950 all the way to 4200. Re OJ, the rally had to start from somewhere sometime. I hope you are holding some. I have been really stubborn on this trade and now it’s beginning to pay off. It could be that when the big 5 realized they couldn’t shake me out they just took me along for the ride. And I am not leaving yet. Lumber is getting cheap. Watch the July and October contracts for signs of a bottom.

GRAINS

Beans got ahead of corn and wheat. Rather than beans falling corn and wheat rallied. Bean basis in South America is softening which indicates a high probability of lower prices. Wheat and corn should follow beans down after the recent rally.

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

Call 615 331 8567 or 800 831 1192, code 04

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. Past performance has nothing to do with the future.