FROSTY FUTURES SEPTEMBER 4, 2003

TECH DATA FOR FRIDAY SEP. 5.

DOW R=9624; 9684; 9734. S=9540; 9515; 9480.

SPX R=1030; 1035; 1040. S=1023; 1015; 1009.

NDX R=1376; 1382; 1393. S=1354; 1347; 1333.

USZ R=10505; 10528 10612. S=10412; 10409; 10400.

GCZ R=376; 379; 381. S=371; 367; 364.

SIZ R=509; 515; 519; 524. S=502; 496; 493.

DXU R=9875; 9910; 9940. S=9820; 9755; 9740.

CLV R=2950; 2970; 3020. S=2850; 2800; 2755.

SX R=590; 597; 604. S=583; 581; 576.

WZ R=373; 378; 382. S=367; 363; 359.

COMMENTARY

INDICES

The Dow is on its way to 9800. Setbacks, after checking rationalizations, are buying opportunities. What it does after it gets to 9800 is anyone’s guess, but a good guess would be to think that a consolidation phase would take place. Shorts need to be careful in this area because there is so much money on the sidelines that a sudden injection of funds could really pop the indexes up. Continue to keep up with the daily support and resistance areas on TECH DATA for guidance.

INTEREST RATES

The longbond continues to tread water in the same area. Dec fence is 10216-10700. Not much more I can tell you. On any given day the market will go up or down or both based on news and cash flow.

METALS

Gold is consolidating above support at 367. This lends some credence to the bull’s argument for higher price. A Fed Governor stated today that disinflation is more of a threat than inflation, for the time being. That rallied the bonds to a small degree but the metals markets were closed and there seems to be little reaction in the ACE markets as I write this. The double top on daily charts buffaloes silver bulls at 524. Bears aren’t strong enough to push prices much lower, however, so we might infer that as time goes by the bears case, looking back at previous August’s and September’s, becomes weaker. High Grade Copper, from the looks of the chart, appears to have taken on some of the characteristics of Gold and Silver, i.e., a secular bullish trend. The Manufacturing sector, worldwide might be picking up enough steam to rally price, especially if mining of copper has slowed.

CURRENCY

The Dollar Index has reached a short-term stumbling block just under the century mark. But as long as stocks keep sending signals of recovery the buck should continue to rally. So what do we watch for the key to the lock? Bonds, stocks, gold? Interest rate is primarily a cost of money issue, stocks an asset of anticipation and gold a measure of fear. Compare all three charts over the last year or so and get a picture. As the picture changes with the dynamic, make your bets. You will be doing the same thing, at the same time, the wealthiest, most powerful money managers in the world are doing. Welcome to the club.

CATTLE

Buyers propelled price through hedgers sell orders this week and obtained new highs for the move. Some records were set in the nearby contracts and cash prices. This market is shaping up as a potential for a blow-off top. Don’t get in the way unless you have cattle on the hoof to sell. Once the blow-off takes place you can get short with plenty of time and room for prices to decline. Good luck. Oh yeah, on your long hogs ( I can’t believe I recommended that and it’s working) keep your stops close or checkbook at hand.

ENERGY

Crude has given us some of our money back. Go Baby!!! Initial target on nearby contracts is 2500 then 2300. And if it really starts to sink it can go to levels in the teens. It’s going to be a very ragged ride because too many people think that supplies are tight and they are not. Unleaded refiners ought to be stripped and whipped for price gouging so don’t get caught in that phony baloney. Natural gas had a nice bounce off long time chart support, but I don't have any idea about what to expect next. Will the players go after the stops below chart support, and if so, by how much? That’s a big contract with a hefty margin requirement ($7500) so look at options if you aren’t a millionaire. It is not for day traders off the floor.

SOFTS

Last week’s high (1820) is going to be pretty tough for cocoa to blow through, but if it does then look for it to get stopped in its tracks at 1895. That on the spot contract. Check out Dec differential where resistance is about 1770. Coffee should have another 100 points to the upside from tonight’s close at 6495 Dec. Well the door got shut on sugar bulls as mentioned in last weeks’ comments. Now to find support. For the time being look no lower than 565 Oct and that’s with a close tomorrow below 590. Cotton continues to climb the wall of worry, and justifiably so. Look for continual volatility and a gradual climb in price. Well, I have succeeded in stimulating some interest in OJ, finally. But some people want to do it their way instead of mine. OK< it their money. But my way is probably the better way. And that is; get long the Jan or March futures and hold on tight or get stopped out early and often and get back in. Be in when the freeze premium gets injected then take profits on your long futures. Buy call options for a freeze event and sell futures back down as winter progresses and freeze fails to show. After the initial test of your strength you’re on someone else’s dime and free to trade.

GRAINS

Cash basis got really strong in some parts of the country as Sep goes off the board. This makes the Nov-Jan spread too tight, some might say. There "ought to be" a six or seven cent spread in there. That is a bullish signal. Corn is being carried along by momentum. Wheat is held in the grips of the island reversal top and good demand at 367.

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.