FROSTY FUTURES JUNE 13, 2003

TECH DATA FOR FRIDAY JUNE 13.

DOW R=9210; 9236; 9315; 9363. S=9135; 9120; 9050.

SPX R=1000; 1003; 1009. S=991; 981; 978.

NDX R=1236; 1239; 1255; 126. S=1218; 1210; 1199.

USU R=12206; 12226. S=12100; 12014; 12000.

GCQ R=357; 363. S=351; 348.

SIU R=454; 460; 467. S=448; 443.

DXU R=9380; 9420; 9560. S=9310; 9240.

CLQ R=3055; 3085. S=2990; 2960; 2860.

SX R=582; 585. S=572; 568; 562.

WU R=345; 349. S=337; 334; 328.


FROSTY FUTURES JUNE 15, 2003

INDICES

I can’t admit to being right or wrong in last week’s column but I can repeat the admonition to beware of signs of a top. I warned you about a short squeeze taking the market to new high ground before failing, but was Friday’s activity a failure or just end of week profit taking? One thing for the bulls is the fact that the market rallied in the face of numbers that should have been given a bearish interpretation. Until Friday, that is. Consumer confidence numbers were down and money came out of stocks and went back into bonds, just that fast. This underscores another statement that I made last week that needs repeating and that is, the market is in the hands of "fast money" not necessarily "smart money." I will pass on to you that I have sold out all my common shares of GE and RD. I can always get back in but I have no intention of giving up profits made the past several months. I am going to base my decisions on what happens to the Dow if, as and when it works between the numbers of 9350 and 9475, if it gets that high. These are such critical numbers at this time I don’t feel compelled to just sit there like a duck in a pond and let the ‘gator’s have at me.

INTEREST RATES

Do you think I should apologize for saying last week what I did about "…fools guiding idiots…"? Well, I won’t and that not because bonds went up in price which I did not foresee. The reason is that scalpers are trading this market. Whether the scalpers are institutional players or guys on the street is immaterial. The speed at which this market will turn will wipe out whatever profits one might accumulate in the short run. Period.

METALS

Gold is caught in a trading range supported near the 352 level and held in check near the

358 level. Note the length of time the Dollar has been consolidating and compare that with gold’s chart pattern. It is worth noting. And if logic is worth anything we should infer that if the Buck goes down then gold should continue up. And furthermore, it shouldn’t be too much longer before the question is resolved. If we were to trust silver’s chart pattern (not recommended) we might guess the white metal was headed higher. Copper ran into stiff resistance near 80 (see last week’s column for that warning) and closed below 7750. Remnant support exits near 7590 and below that at 7550.

CURRENCY

As mentioned above our Dollar is in a consolidation phase. Resistance is near 9410 with support parallel below near 9225. Watch the Yen as it tries to rally into the 8585 area. Try some puts and if they begin to give you the feeling you are into something good, sell the futures. It isn’t very likely their central bank will allow the Dollar to sink relative to the Yen. So I expect some bank intervention to weaken the Yen as the Dollar slides, if the Dollar slides.

CATTLE

The August live cattle contract has fallen to the three-month old base of support near 6700. The spread between cash and futures is so large that it will be a big surprise if the base is broken at this time. But how big a rally we might see from this level is going to be hard to determine. It would appear that the market is working on the presumption that demand will wane, supplies will increase as the ban on Canadian beef will be lifted, and that the normal pattern of summer low’s in price will be repeated. It would not be out of line to expect to see a trading range from 6600 or so up to 7150. Talk now is of heifers being held back to build the herd. This should be supportive of Feeder prices. But they are already pretty high. Find a better place to trade.

ENERGY

Even though it is on a daily chart I believe it best to believe we have a double top on the crude market. What makes it more difficult is the range we saw Friday (2960-2820). That kind of volatility us just really hard to trade. But, be that as it may, I believe we will see crude under 20.00 before the end of the year. So, as OPEC tries to control prices by hook or crook, be patient and sell into rallies.

SOFTS

Cocoa has based but the only rally I would expect is of the short-covering kind. Maybe 1580 to 1640 tops unless war begins again. Coffee is bouncing off its base of support, but there is so much supply, even with the intentions of Vietnam cutting its coffee growth, that an important rally is not likely, given what we now know. Bulls are left "hoping for a freeze" and that is not a good bet. Sugar remains is a bear pattern. Establish your trendlines, look at horizontal resistance levels and be patient enough to sell into rallies. That was one hell of an explosion under cotton last week. The news is all bullish but profit takers didn’t want to let the windfall get away from them. Now what happens will be day to day. So watch for a band of support and resistance to develop and trade with a bullish bias. By now you guys know what a bias I have toward OJ. I am not going to change. Buy the breaks, you will get your money back.

GRAINS

A rally presented itself for you to sell, as recommended here. I hope you did. Approach the grain markets from the sell side on rallies. Continue to do so unless rain stops completely or the situation in Australia becomes so bad September wheat takes out 350. Then buy wheat and sell corn (or beans if you are nervy enough).

CONTACT ME: williamfrost@comcast.net or call 800 825 0109, code 04 or call 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 is no assurance of future results.