FROSTY FUTURES SEP 25, 2003

TECH DATA FOR FRIDAY SEP 26.

DOW R=9425; 9459. S=9340; 9315; 9255.

SPX R=1013; 1016. S=1002; 997; 992.

NDX R=1351; 1358. S=1320; 1300; 1280.

USZ R=10018; 11112. S=10923; 10913; 10820.

GCZ R=389; 391; 395. S=384; 383; 376.

SIZ R=528; 536; 540. S=520; 517; 510.

DXZ R=9425; 9475; 9500. S=9370; 9340; 9305.

CLX R=2853; 2870. S=2818; 2765; 2720.

SX R=661; 667. S=651; 646; 640; 628.

WZ R=365; 367. S=356; 348; 343.

COMMENTARY

INDICES

Well folks, here we are near the end of September. The next 35 or 40 days could be very interesting. As you know, fall can be a drop kick through the goal posts of life in stocks. So let’s not be assuming, or pollyanna-ish, but rather careful, patient and observant. We should keep in mind that the secular trend, while youthful, is positive. And, that good support lies between 9250-9000. I do not back away from my prognostication that the Dow has targeted 9800-10,000 on its track, but, unless the wall of worry is very low that target may be arrived at later rather than sooner. Watch TECH DATA daily for support and resistance targets and let’s take this one day at a time.

INTEREST RATES

The longbond is in the upper reaches of its statistical range for the time being. One standard deviation from the mean since the first of August, to the upside, is in the area of 11100 plus or minus 16/32. Look for a classic pattern reflecting money flow before making decisions relative to positions. Scalping can be done between published support and resistance areas as provided daily in TECH DATA.

METALS

Of note to metal traders today, at least some of us, was the news from Kodak. One trader suggested that the absence of that one company could decrease the demand for silver such that it could fall to as low as $3.00/oz. Now, I don’t know if that is true, but it can’t be said that Kodak’s absence would have no effect on price. The exchange did a great job of preventing a panic on the floor. And it needs to be stated that strength in the presence of such bearish news speaks well. Let’s see what happens tomorrow before changing our bullish bias to all out bearish. Gold is vulnerable to a $10.00 correction without changing trend. And it is just as likely to rally into the $395-400 area. High Grade copper looks winded. At the top of its recent trading range note that for the past several days the closes have been near the days lows. This reflects traders unwillingness to take long positions overnight.

CURRENCY

Expect our Dollar to continue to bounce off 9400 support, gradually easing further down to test the bottom of the support band near 9250.

CATTLE

Hesitation is the key in this complex. Prices are very high. Based solely on chart profile, one has to recognize the very high potential for a contra-seasonal pattern this year. If that profile takes place there is more potential profit in feeders than in live contracts. Play it the way you want, or don’t. Eventually over the coming season Canadian cattle will be winding their way south and Mexican and South American cattle will be floating north. Don’t be caught being a bag-holder at the top. These guys are looking for "THE GREATER FOOL."

ENERGY

My stand is that the current rally in oil is a selling opportunity. True, I am hesitant to sell futures outright at current levels, but I did do some vertical put-spreads in the Dec contract today. That is, I bought the at, or in-the-money puts and sold out of the money puts. My target for this trade is the base near 26.00.

SOFTS

Cocoa may consolidate after the jump it took this week. Bring stops up so, if you are long, you don’t get caught in another drop like we had last week. Coffee also found support and tested 1st level resistance near 6650. A close on Dec contract above 6700 indicates a rally toward 7000 is forthcoming. Sugar is in a slight downtrend, looking for support. Maybe I’ll recognize it when it happens. Any close below 6550 Dec cotton is bearish. Funds and large specs will use that as a sell signal. Continue to hold Jan and March OJ from current low levels and await the installation of this winters’ freeze premium. When that happens, take profits on futures, buy calls and then, absent a freeze, sell into rallies using futures.

GRAINS

Forecasts for freezing temps into southern Iowa next week sustained beans’ rally but those temps are being lowered as the day’s progress. Vulnerable to a sharp drop. Corn is also vulnerable to a drop in price. A Dec close below 223 shuts the door on bulls. Dec wheat may try to close the gap near 368, but the top is in. Grains are, overall, presenting a bearish profile.

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.