FROSTY FUTURES JULY 10, 2003
TECH DATA FOR FRIDAY JULY 11.
DOW R=9120; 9150; 9220. S=8998; 8982; 8870.
SPX R=997; 1006; 1011. S=985; 982; 962.
NDX R=997; 1000; 1005; 1010. S=985; 982; 975; 961.
USU R=11531; 11607; 11716. S=11509; 11501; 11416.
GCQ R=346; 349; 354. S=342; 339; 334.
SIU R=490. S=473; 464; 458.
DXR =9590; 9625; 9650. S=9540; 9510; 9475.
CLU R=3130; 3165; 3240. S=3054; 2980; 2920.
SX R=534; 539. S=528; 525; 522.
WU R=319; 323. S=311; 307; 303.
INDICES
We should get a feel tomorrow for just how much strength the bulls have. The
level at Dow 8982 is significant because of the importance that area presented
last week. Even though prices penetrated that level intraday, closes were at
or above that level. Note that in the Tech Data info, I have presented to you
three levels of support and resistance on both Dow and SPX indices, but four
in the NDX. If you trade the indices tomorrow keep watch on the confluence or
rejection of support on these significant points.
INTEREST RATES
Tbonds are poised for a move of good proportion in the near future. Note that
the first two resistance levels provided are close together but the third is a
good ways away. This is to imply that resistance is strong early on but that
penetration of this band may stimulate new buys or short covering
aggressively. Note also that support under the Sep contract is apparently
strong within the band running 11509-11416, a little less than one-point. IF
this band is broken the next target becomes 11316.
METALS
Gold should begin to find some support near 342-341. Both horizontal support
from early May and the phenom of Fibonacci come into play at that area. This
should provide stimulus for short covering and new spec longs. Expect, at the
very least, a bounce from that level. Should stops be vulnerable you may
experience a shot down to 334 to clean out the decks of floor brokers before a
rally ensues. One wouldn’t think that silver could rally this strongly without
gold but such is just the case. If today was a reversal then look for gold to
clear out the stops before rallying and for silver to follow stock index
patterns. Copper’s chart pattern will mirror silver to a great extent.
CURRENCY
The Dollar has built a nice base from 9400 down to 9250. As things currently
stand resistance is 9650 with support rising to 9450. Note the additional
50-points above the top of the old band. This indicates a stronger bias in the
bull camp. Yen traders will probably lean more toward the bear camp with the
Yen in the 8500-8600-resistance band. Wall Street Underground subscribers are
being told to short the Yen aggressively. Nick has had a pretty hot hand over
the past couple of years but it is worth mentioning that his last really big
hit came out of the currency pit, and he is not doing so hot in other markets
either. But time will tell.
CATTLE
One close above resistance on the summer cattle contracts doesn’t make a bull
market. That is what traders are recognizing now that the futures have
reversed off new contract highs. A double-top off that high is another
indication of skepticism on behalf of traders, particularly fund managers. Old
hands know that the cycle can throw a curve ball from time to time but more
often than not lows will be seen in the August contract, whether in August or
not, than in June. Those of you who have been following this column for some
time might remember I mentioned some time ago that summer prices would hit, at
least, the upper to mid-sixties. Upper sixties held and with the drop in
supplies and good demand prices have cattlemen of all stripes eagerly
searching for "good buys" in the yearling category to pasture and put on feed
in the coming months. So with that you may want to begin to place orders under
the fall and winter contracts, even going out to next spring and begin to
collect a wad of contracts for the very likely winter – spring rally. August
through November feeder contracts have already expressed this bias so don’t
get caught too long in the feeder market. But if you placed buy orders 150-300
points under those current prices you may pick up some based on market
volatility as time passes and the locals cut the small traders up.
ENERGY
Bearish bias notwithstanding the crude pit has made mockery of we bears. One
excuse after another, or the proverbial "you just wait…you’ll see" lines come
out of the pens and mouths of guys like me who just were sure after America
kicked Iraq’s ass the oil would just flow like milk and honey and prices would
be in the teens. Well, here we are, our guys are still getting shot and blown
up there, Nigeria’s workers are using the suspense to take advantage of things
for their own purposes (I don’t know why that surprised us, someone should
have know it, but then I guess since price is up someone did) and crude is
attempting to retest highs from last spring (?) and as mentioned, prices are
up. I got stopped out of most of my longs when Sep hit 3100. But I am buying
Put options in Dec because I am hard headed and believe that oil will flow.
How many of you I am going to lose because of that I don’t know, but there you
have it. If you can’t stand the heat, get out of the kitchen. If any of you
can take the natural gas market’s moves with more than ten contracts let me
know. It would be nice to meet someone who still has some money left.
SOFTS
Cocoa is a market awaiting rallies to sell into. Stabilizing forces have the
upper hand for the time being. Support at 1460 should be tested soon.
Resistance at 1570 should hold. The bearish engulfing line and in-trend double
top on Sep coffee near the band of resistance established over the past couple
months should be enough to keep the bulls defensive. Players who watch the
commitment of traders reports are watching history as they see large
commercial longs positions. These can change quickly. Sugar has broken a
downtrend but has to close a few times above 660-680 to stimulate new money
from the long side. Watch what the shorts do between 625-615, this basis Oct.
In the cotton pit a close in Oct below 5900 may bring in a test of 5600. But
that would be an excellent place from which to get long. One never knows, so
keep some powder dry. OJ continues to build its base ( I think) from which I
expect a rally back to and maybe through 9800. I am told commercial longs are
very long on a historical basis. You guys know my thoughts on OJ, I remain a
bull based on supply. I can’t help it if so few big traders control this
market in any short term duration, they can’t hold it down forever. The big
double top on Nov lumber looks bad for stocks. As a leading indicator the
lumber pit is pretty good. And right now it looks like we are headed for
another dip in lumber and stocks. The formation would complete with a close
basis Nov below 275.
GRAINS
Corn may be in the washout stage of its cycle. Pay attention. Price is a
little high to make this statement with any real conviction because there is
remaining a slight inflation/pro-commodity bias in price. This means that corn
is still vulnerable to a drop into the 190’s. Beans, as stated here often in
the past remain a bear market. You had the spring rally to sell into and a
huge South American crop to back you up. I would begin to cover shorts more
and more as the market approaches 510, my target for the Nov contract. Chicago
wheat may have bottomed. The old "From the Tombs" trade is to get long Sep and
Dec wheat in July. Oats are too high to buy for any speculator. Sell rallies
and watch the weather in European growing areas, or just do the tech’s and
forget the fundamentals.
CONTACT ME: 615 331 8567 or email
williamfrost@frostyfutures.com
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be used. Past performance is no assurance of future profits. Information
contained herein is believed reliable but original sources of data have not
been independently verified therefore is not guaranteed. Ideas and suggestions are the opinion of the writer and are subject to change at any time. Nothing herein should be construed to be a solicitation to
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