FROSTY FUTURES SEP 18, 2003

TECH DATA FOR FRIDAY SEP 19.

DOW R=9635; 9698; 9750. S=9560; 9500; 9470.

SPX R=1037; 1041; 1050. S=1034; 1026; 1019.

NDX R=1414; 1425; 1482. S=1382; 1368.

USZ R=10913; 10916; 11008. S=10810; 10728; 10714.

GCZ R=381; 385. S=377; 375; 373.

SIZ R=538; 545. S=520; 517; 510.

DXZ R=9650; 9675; 9690. S=9580; 9550; 9500.

CLX R=2735; 2780. S=2680; 2615; 2500.

SX R=630; 637; 642. S=622; 618; 611.

WZ R=344; 347; 352. S=338; 331; 324.

COMMENTARY

INDICES

There lies some resistance on the Dow near 9700 but most selling should take place in that band between 9800 and 10,000. SPX resistance is strongest between 1050-1100. NDX resistance lies in the area of 1500-1575. You just have to follow tech data, if you are relying on me, to any degree, for support numbers. That is a day to day thing based on news, currency trade, interest rate and perceived productivity of the multinationals. While there is a lot of talk about putting Americans into better paying jobs the truth of the matter is that most large corporations are multinational and don’t really give a rats ass about the average American worker. It’s profits, bottom line, only. Good corporate citizens? My butt! Keep in mind that most of our gas stations are foreign owned, food companies are foreign owned, etc., etc. Part of the so-called "solution" is to build lower cost items, for consumers having less money. And this under the "intellectual" guise of "deflation." At least some of the pseudo-aristocracy is going to jail, even if they are merely scapegoats. More of them need to go, but the real problem makers never pay the price, their kind never do.

INTEREST RATES

It can be argued, or debated, that the long bond is building a base from which to go higher in price, lower in yield. If the deflation side of the debate is emphasized and accepted then yields will come down. If, however, money supply increases continue unabated and jobs continue to flow overseas debt in America will grow to the point that investors will demand higher yields and the government will monetize the debt and inflation will skyrocket. And that’s the way the secular trend is going. Damn the hogwash you hear from politicians, pundits on TV and corporate leaders. And then, we could have a case of both, the former in the short run and the latter in the long run. In which case we should expect the rally in price to continue for awhile longer before selling.

METALS

Gold is struggling to maintain its uptrend, reflecting uncertainty as discussed above. Looking at the Dec contract, a close below 374 is a warning, below 371 is a shot amidships of the bull’s case. And a fast sinker it may prove to be, so pull up your stops and don’t get caught too long in a downdraft. Silver is, once again, hard to decipher so use stops whether you are long or short. Ditto copper. The secular trend remains up in all three of these metals but they are all high on a relative basis, therefore subject to sharp drops.

CURRENCY

The Dollar found support today near 9550 Dec and managed a close just a few ticks above the opening price. The strength in stocks helped propel the rally but even with a strong stock market, the leaning post of Dollar Index trade lately, the rally was anemic. My guess is that the Dollar will find resistance pretty stiff near 9675, if it can get that high. The Yen is worth watching tomorrow for a possible island reversal pattern. Very bearish.

CATTLE (With hog comment)

I am now watching the April contract because it has formed a double-top formation and the money flow indicates traders are accepting it as valid. We should expect a test of, at least, 7680 on this contract. Resistance is about 7890. Feeder traders believe the fed cattle will find good support at that point. Feeder prices remain very high. Now, what we don’t know is the complexion of money in that pit. Is it funds, commercials, or just no action? Look at the commitment of traders reports, volume and open interest. Just as an addendum I will mention the hog trade recommended a few weeks ago. I got stopped out of my longs and I suggest you bring your stops up such that if the Dec contract closes below 5685 you are out.

ENERGY

Crude stats proved bearish this week and the downtrend continues. Russian oil, along with Iraqi oil is back on line, and obviously, after the report, in greater amounts than expected. There lies a good deal of support on nearby contact beginning near 2650. Today’s low at 2675, at 0514 Central Time, shows a world watching and trading. The rally was not very enthusiastic, but if today’s low can’t be taken out tomorrow (Friday) then we should expect a round of short-covering and a 25-32% rally. I doubt if it can take out 2950, but as always, use stops. Natural gas still appears to be under pressure. Hold off on building long positions. Our day will come.

SOFTS

Cocoa remains in consolidation after rains hit a dry area and the market tumbled. Coffee, never far behind cocoa, one way or another, lost some of its shine but has found support above 6200 for the time being. Sugar trade remains in a downtrend albeit losing momentum fast. There is no forecasting how long the present formation will last. In all likelihood the downtrend will pick up momentum before reversing. Cotton, particularly the Dec contract, is in an interesting pattern of trade. Ever widening daily ranges with more up days than down days indicates a strong bullish bias. Cotton is a market dominated by spreaders so don’t let individual contract patterns throw you. Always check out spread charts before making a decision. If you can’t get spread charts change software if you are going to trade cotton. OJ traders are witnessing pressure prior to this winter’s freeze premium being put into price. Use these price breaks to establish long positions in the Jan and March contracts. Don’t overload yourself but, if you are going to trade OJ, this is a better way to do it. Another option, not optimum, is to put buystops over the market and try to catch the market on the way up. The danger there is getting terrible fills, or no fills if the market suddenly turns and locks limit up several days in a row.

GRAINS

Beans remain in their uptrend, support near 610 Nov and target near 645 for the time being. Short covering is key in Dec corn as chart support near 220 is approached. Resistance near 229 will be key pivot for rally attempts. Dec wheat now targets 323 for support with resistance near 346.

CONTACT ME: williamfrost@comcast.net or call 615 331 9567.

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.