FROSTY FUTURES SEP. 11, 2003

TECH DATA FOR FRIDAY, SEP. 12.

DOW R=9503; 9525; 9610. S=9424; 9390; 9350.

SPX R=1023; 1029; 1032. S=1012; 1006; 999.

NDX R=1360; 1367; 1374. S=1342; 1328; 1320.

USZ R=10713; 10728. S=10614; 10518; 10428.

GCZ R=383; 385; 390. S=379; 376; 372.

SIZ R=537; 543; 548. S=526; 521; 515.

DXZ R=9725; 9775; 9820. S=9680; 9620; 9580.

CLV R=2910; 2955; 3025. S=2860; 2820; 2800.

SX R=621; 630. S=614; 608; 601; 585.

WZ R=354; 360; 363. S=348; 344; 338.

COMMENTARY

INDICES

This week the magic support number for the Dow Index is 9418. If the weeks end close is above that level then, next week, we can expect a revival of the rally heretofore mentioned with a target of 9800-10,000. Once again, you must investigate the rationale behind any pullback before making a trading decision relative to the long side. Given a good withdrawal the Dow could come back to the 9200 level. Support under SPX is very strong at the 1003 level. NDX will find excellent support at the 1300 level, if that should be tested.

INTEREST RATES

The longbond penetrated last week’s stated resistance at 10716 by half-point, but then reversed and, today closed below that level, to near 10700. I suggest selling into intraday rallies, but use pretty close stops. Try to avoid selling into strength near given resistance points as provided by "Tech Data" and sell when the trend begins to turn down. There are enough of you out there now for the locals to "lay for" at these points. They will run the market up 6-8 or 10 points to get your stops.

METALS

More noise is being made on TV about the future of gold, but undertone is not particularly loud as of yet. Insiders are now looking for a rally to the 400 level, but not much is being touted about anything higher than that. Silver, if it plays a parallel to gold, will have trouble getting through 565-575. Both these levels are substantially away from current prices so don’t get scared out yet. You can see Copper found strength late in the day.

CURRENCY

There is support under the Dollar near 9650 but I don’t think it will hold for long. As common shares rise in price as unemployment gets worse confidence in the geenback will falter. Those in the world order will enjoy gains as jobs are exported from the US to China, India, Korea, Latin America, etc. But as the workforce in the US is squeezed into lower paying jobs the taxing ability of the government will be strained. Hence a lower buck. That is very fundamental and not something you can trade on day to day. But overall, the trend on the Dollar should be coming down. And stay in that direction until employment picks up and average wage improves.

ENERGY

Please note the way all bull spreads have collapsed in the energy contract sectors. This portends a further drop in prices. Beware the natural gas contract and don’t include that in our oil strategy. Distillate runs are an important thing to watch as heating oil stocks are relatively low. So, like the unleaded runup we saw before Labor Day, you have to be prepared for that kind of a spike. The best way to play it, although it’s expensive, is to buy call options and trade futures from the short side.

SOFTS

Cocoa took a plunge today. I haven’t heard what the rationale was behind the move but it gapped lower and never looked back. More than likely the selling was overdone and there should be some recovery by week’s end. Too bad there is no guarantee of that. Coffee held trend in the face of cocoa’s debacle. That is unusual. Expect some profit taking in Dec coffee near 7300. If Oct sugar can hold 597 then some short covering may come into the market Monday. Cotton has run off. Expect some profit taking at the 6500-6700 level. It would be a good thing for bulls if the nearby OJ contract could hold 7960.

GRAINS

Refer to the best trades data I sent out today for strategy on grains. Excellent spread ideas and outright trades are provided that, given the supply situation, should work out well again this year. If you didn’t get them, or are reading this for the first time and want the best trade ideas, send me a note.

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.