FROSTY FUTURES MAY 23, 2003
DOW R =8630; 8650; 8750. S=8560; 8510; 8420.
SPX R=936; 949. S=928; 922; 914.
NDX R=1138; 1148; 1165. S=1126; 1112; 1104.
USM R=12120; 12200. S=12015; 12012; 12006.
GCM R=373; 376; 379. S=366; 364; 357.
SIN R=473; 476; 481. S=465; 455; 453.
DXM R=9410; 9550; 9610. S=9350; 9310; 9215.
CLN R=2910; 2955; 3080. S=2840; 2800; 2760; 2610.
SN R=638; 646. S=624; 616; 606.
WN R=332; 338; 341. S=323; 313; 308.
INDICES
I mentioned to you a couple weeks ago that the Dow could drop to the 8400
level before the uptrend currently in place would be damaged. So far that
level, although tested, has held. The caveat is the potential for a head and
shoulders formation to mature on daily charts. A close below 8450 would test
the above mentioned theory pretty hard. To all but eliminate completely that
possibility I would like to see a close above 8750 in the very near future.
SPX formation is just slightly different, perhaps not enough to matter, and a
close above 949 would present the completion of a corrective wave and lead
technicians to expect a test of the next level near 961. NDX is the weakest of
the three and a serious breach may take place in the event a close below 1105
should develop. The cash CRB is consolidating. A close below 238 should
stimulate sales and reflect a drop in grains, oil or both.
INTEREST RATES
My target of 12200 on the long bond is at hand. What happens from there,
or here, is anyone’s guess. I am refinancing some debt at 4.75 but points and
fees bring it up to 5.03. Someone has to make some money. Think about it.
METALS
Hook reversal in gold may be a warning to us who are playing from the long
side. Maybe gold is warning us of a drop in oil prices. This market is so
skittish, great plays are around if you can stand the tension and reversals.
Unless there is a real change in the direction of metals silver should find
support at 460. Below that and the door is open to test contract lows. It
would appear, however, that copper production has slowed and this should serve
to prop prices of copper and silver. So watch the charts and see what
develops. Be skeptical of chart formations however because charts can be
painted by large traders.
CURRENCY
It could be that the entire theory held above is contingent on the Dollar.
If the greenback bottoms I believe stocks rally, commodities fall. So if you
want to take a real risk and be a total contrarian, but the buck, use stops
and buy it again. After all, now that we know that "what’s his face" is short
the Dollar because Treasury Secretary Stone told him the Dollar was going to
go down maybe it’s time to fade the action.
ENERGY
As long as price stays up in the 27-30 range, production will not fall.
This will lead to over supply and a decline in price. Sell rallies. Natural
gas is being boosted by Greenspan’s testimony that supply problems are a
macro-economic issue. Too many users coming on line without a commensurate
increase in production. No one is talking about this issue he says. That is no
wonder. We have gone from a belief that supplies of natural gas were as
abundant as sea water. Now, all of a sudden, there ain’t none. The rationale
is that it is there, we just can’t get at it. So there is a macro-trade for
you believers. Get long natural gas, sell puts, buy calls. If Greenspan is
right, you get rich if you can hang on to your position.
SOFTS
Island reversal in the cocoa pit. Buy breaks with stops pretty close.
Uneven top on coffee charts indicates weakness. If you are tempted to buy do
it in the low end of the range or buy a breakout to the upside. Sugar should
continue its downtrend. Ample supplies afloat and sag in demand are key
issues. Cotton is consolidating. The only probable big move is down.
Resistance above current consolidation looks pretty strong. OJ traders tried,
again, to shake me out but they haven’t been able to do so. Keep those calls
and add to positions on breaks of 200-300 points. Lumber is at the top of its
trading range and its all about the economy. Don’t get caught in a bull trap.
GRAINS
Spring rally appears to be over. Play from the short side on rallies. No
reason for July corn not to retest 230, July beans 600 and July wheat 298.
CATTLE
BSE (Bovine Spongiaform Encephalitis) (sp?) stimulated a break but that
shows the market was near a top anyway, in my book. Note recent trade on the
snap back has not been able to retest highs to any great degree. Odds are
great the market will decline into summer from here. Feeders to follow in a
jagged fashion. But naturally, if you short the June contract keep stops in
place. Cattle are notorious for slapping unsuspecting, know-it-all traders
right in the pocketbook.
CALL IF YOU HAVE QUESTIONS.
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. Past performance has nothing to do with
the future.
