FROSTY FUTURES AUGUST 28, 2003
TECH DATA FOR FRIDAY AUGUST 29.
DOW R=9395; 9425; 9480. S=9342; 9310; 9260.
SPX R=1004; 1009; 1016. S=999; 996; 992.
NDX R=1337; 1345; 1355. S=1324; 1319; 1309.
USU R=10814; 10912; 10928. S=10704; 10613; 10604.
GCZ R=375; 378; 383. S=370; 368; 364.
SIZ R=519; 524; 530. S=509; 505; 501.
DXU R=9900; 9945; 10015. S=9870; 9825; 9750.
CLV R=3170; 3210; 3240. S=3130; 3105; 3045.
SX R=590; 597. S=583; 578; 568.
WZ R=374; 379; 385. S=370; 366; 362.
COMMENTARY
As long as the Dow cash index can continue to close above 9325 the trend
remains up along with bias. I expect a rally over the next several weeks to
few months to reach into resistance near 9800-10,000. SPX and NDX may appear
to lead the way, as NDX is now doing, but it will be underscored by strength
in the Dow. Should the market fail up here and close below that key 9325 area
then a retest of 9150-9100 should follow.
INTEREST RATES
The longbond is inching its way up into overhead supply near 10816. A close
above that level, and a further recovery will take place, probably up to
11100-11116. The yield curve is curving like a snake so be careful with yield
curve spreads. If your software can chart spreads this is a great time to use
them. If yours don’t, mine do. Call for help, and be ready to open your
account if you are just a subscriber. Yes I will ask you.
METALS
Gold really ought to hit 376 before any big decisions are made, one way or
another. A close above that mark will stimulate funds and commercials to
action, but it will further the trend. I keep hearing some old timers warnings
about inflation down the road, whether in 2004 or 2005. Futures markets have a
way of being way ahead of the news sometimes. Once again I suggest to you to
begin to keep track of the money supply on Thursdays afternoons. I just tried
to access the Treasury Dept’s site and couldn’t negotiate my way to find it
and am on hold with the Dept’s operator. So far, no luck. Silver still hasn’t
taken out the double-top at 524 and this should give pause to silver bulls.
Fundamentally, I understand, you feel like you have got to be in. But
technically, timing is questionable. Don’t get ahead of yourself. High grade
copper has support as long as closes above 7940 Dec hold.
DOLLAR INDEX
As long as the Sep contract can close above 9870 the bulls remain in charge. A
failure there and I suggest getting short the buck, long the Eurofx quickly.
This event may also be a shot across the bow to stock index longs.
CATTLE
Nearby contracts continue to lead the reluctant deferreds. Canadian cattle are
slipping over the border in orderly numbers insufficient to break the back of
the bull run. But skeptical businessmen know that high prices bring supply
forward. So they are actively hedging those spring months. Watch open interest
figures and COT w/OPT reports for indications and signals of when to get
short. It’s too damn high for me to buy. Don’t’ feel too hesitant to buy a put
or two in the feeder market. It’s only money. Here is something you haven’t
seem me do in five or six years, if ever. Try a winter hog contract from the
long side. Base building and cattle might pull lean hogs higher.
ENERGY
Just more consolidating type trade in crude. Unleaded gouged everybody.
Heating oil just followed. Natural gas is building a head of steam. Greenspan
didn’t give us a heads up for his health. Or maybe he did. Whatever, it has
built a base and, if our Chairman is correct, it’s higher prices from here.
Basis Oct a close below 485 portends another shot down, in spite of what he
has said.
SOFTS
Cocoa has reached the gap area from last May. There should be some hesitation
here. Coffee is vulnerable to a setback to 5900. Resistance will wither with a
close above 6175 in the spot month, and 6460 basis Dec. Support held under
pressure on Oct sugar today. But a close ten-points lower might have shut the
door on bulls. Watch the close tomorrow, it’s a holiday and thin. Spot cotton
will make or break for the next move at the 5750 level. A close above that and
commercials will be stimulated to be long cash, short futures and large specs
will cover shorts and get long. OJ is feeling around for a bottom but has not
yet found it. Well heeled traders should go ahead and get long some futures
before the freeze premium gets established. Then take profits and buy March
call options to ride out the winter on someone else’s money. This will allow
you to trade futures from the short side absent a freeze as winter progresses
with pre-paid long calls protecting your positions. It’s a good strategy but
not for the poor or weak.
GRAINS
The event in beans is the bearish engulfing line at the top of prices. A top
is near if not at hand. Corn remains in a bullish configuration. In wheat, the
island reversal has gained more respect from traders as the days pass.
Continue to sell rallies.
CONTACT ME: williamfrost@comcast.net
or call 615 331 8567.
Trading futures is for individuals willing to assume
greater risk for the opportunity of greater rewards. Only speculative capital
should 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 trade futures or options. Hedgers should have a defined plan.
