FROSTY FUTURES OCT. 9, 2003
TECH DATA FOR FRIDAY OCT. 10.
DOW R=9740; 9770. S=9640; 9595; 9540.
SPX R=1045; 1048. S=1035; 1030; 1026.
NDX R=1408; 1418. S=1386; 1369; 1361.
USZ R=10802; 10814; 10821. S=10628; 10608; 10524.
GCZ R=374; 378; 382. S=368; 363; 358.
SIZ R=491; 497; 503. S=480; 477; 472.
DXZ R=9265; 9280; 9325. S=9190; 9160; 9080.
CLZ R=3120; 3140; 3175. S=3025; 2950; 2925.
SX R=698; 701; 743. S=670; 664; 648.
WZ R=335; 338. S=322; 313 (CROP REPORT OUT 0730 FRI AM.)
COMMENTARY (This is a repeat of last week, not much has changed).
INDICES
The Dow penetrated some minor resistance today and managed a close in the
upper end of the range. As I stated in last week’s column, the next few weeks
are going to be very interesting so let’s just take it a day at a time and go
from one signal to the next. Monitor TECH DATA every day to find help
determining support and resistance levels on the DOW, SPX and NDX.
INTEREST RATES
The longbond went farther up in price than I thought it would but now seems to
be in an area of substantial resistance. As you can see, TECH DATA provided
precise levels of support and resistance today. During the month of October
you must expect everything. So key in and become more aware of what the day’s
potential holds relative to these key points of interest. If anyone tells you
they know what is going to take place tomorrow or next week, just smile and
wish them well. They are in a dream world. Or his name is Greenspan.
METALS
With stocks and bonds in a confused state one might think that gold would be
the place to go. But with the Buck holding its own above support at 9250 all
the metals are stuttering. So whether it’s gold or silver that provides an
indication of things to come we just have to wait and see.
CATTLE
Tight supplies and good demand are key to bull markets, and such is the case
on both counts in this sector. These historically high prices will not last
forever as, eventually, high price will limit demand. When that level is
reached is unknown to me but the charts will show it and in a big way. Don’t
let this chart formation make a "bag holder" out of you. Let the pro’s duke it
out. But when it does break, develop a plan of attack before you begin
throwing money at futures or options. If you do, your probabilities for profit
go way up.
ENERGY
Rallies in crude complex remain the focus of traders. How high and how fast is
a good question. As for myself, you can now see why I began my own approach by
doing vertical put spreads (buying at or in the money puts, then selling out
of the money puts). My losses are limited and I have until the middle of
November to wait things out. To all Natural Gas traders, it is time, in my
opinion, to begin to place some vertical call spreads out in the Jan or Feb
contracts. The way to do this is to buy in the money, at the money or just
slightly out of the money calls and selling calls farther out of the money.
Margin on futures is about $7500 so options may be a better play for many of
you, even though the premiums are rich. Subscribers and clients rec’d some
recommendations this afternoon on one way to play this. If you are neither a
client nor subscriber, just sign up.
SOFTS
Cocoa presented a bearish signal today by closing the breakaway gap presented
last week on the way up. Basis Dec, 1420 is the current target. An
outside-down day in coffee lends weight to the bears’ case. But a Dec close
above 6550 re-instates the bulls’ case for more up. March sugar is holding
above support but lacks sponsorship to sustain a rally for the present. Dec
cotton continues to work higher. A good low risk trade, expecting quite a bit
of volatility, would be to buy a vertical put spread. If the market garners
strength one’s loss is limited but if it takes a tumble a quick buck can be
made. It won’t be long, as the weather continues to get colder, before the
annual freeze premium gets installed in the OJ pit. If you have been watching
this and not acting you may be running out of time.
GRAINS
Beans are in a great position for more rally potential. Weak currency, tight
on hand supplies and freeze potential on late crop areas all combine to keep
traders in action from the long side. Note how rarely beans rally without
carrying corn and wheat with them. But that is what is happening now. So I
maintain my bearish stance on grains for the present. Don’t lay down in front
of a train re beans, but don’t be afraid of them either.
When harvest gets underway the rest of this month and next watch the cash
price slip lower and lower relative to futures. Then futures will break.
CONTACT ME: williamfrost@comcast.net
or call 615 331 9567.
TO SUBSCRIBE: www.frostyfutures.com.
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.
