FROSTY FUTURES DEC. 11, 2003
TECH DATA FOR FRIDAY, DEC. 12.
DOW R=10,026; 10, 042. S=9964; 9925; 9860.
SPX R=1074; 1077; 1083. S=1068; 1063; 1053.
NDX R=1423; 1435; 1448. S=1408; 1398; 1388.
MAR TBOND R=10902; 10910; 10928. S=10804; 10818; 10712.
FEB GOLD R=409; 414. S=405; 400; 398.
MAR SILVER R=564; 566; 574. S=558; 552; 549.
MAR DOLLAR R=8975; 9010; 9040. S=8925; 8895; 8875.
FEB CRUDE R=3200; 3230; 3260. S=3125; 3090; 3060.
FEB NAT GAS R=700; 743. S=638; 630; 615.
MAR BEANS R=780; 784; 789. S=766; 762; 752.
MAR WHEAT R=397; 403; 408. S=386; 383; 378.
COMMENTARY
INDICES
Led by the Dow, stocks are on a tear to check out resistance levels recently
established. New highs on Dow 30 stocks are pulling SPX and NDX levels. Some
traders believe that because charts are near the tops of recent channels, or
in some cases just above, it is prudent to jump into short positions.
Personally I think the markets are reflecting better economic conditions
relative to "stock prices" not necessarily what’s good for our country.
Business run for the betterment of business is not necessarily better for
workers. But we trade markets not workers. So when you get tempted to short
into this economic recovery don’t complain if you walk out with less rather
than more. And don’t confuse issues. The weakness in the Dollar is separate
from the strength in stocks.
INTEREST RATES
Longbond chart formation is in a curling pattern bound by 10700 and 11000
basis the March contract. The longer it remains within this pattern the
greater the odds of a "dribble" to lower prices. But if the formation is
broken soon we expect to see a dramatic move one way or the other. My own
bias, bearish, leads me to believe we will see the March bond test par. But
that doesn’t preclude a short-term rally into resistance near 11100. Follow
TECH DATA daily for support and resistance levels.
METALS
Currency values are affecting gold’s price. And probably silver also. The Buck
is due for a bounce and so we expect gold and silver to correct. Today,
perhaps, was the beginning, or the end, of a correction. I don’t know. You’d
think there would be more than one or two day’s worth of correction in the
currency, but we don’t know. Silver’s strong close gives evidence this might
not be the case. Sell weakness in gold and silver just as swiftly as you
should buy strength. Go with the breakout of copper’s flag pattern.
CURRENCY
The buck is bouncing, but it may turn out to be a lead balloon bounce. As has
been stated here for many weeks, I think the Dollar Index is headed for 8800,
and after a bounce from that level down to 8400. You might ask, if you aren’t
ahead of me (most of you are) why the Dollar would continue down with stocks
showing such strength? I repeat my theory that the Dollar is perceived as a
fiat currency worth only what foreign buyers believe can be "backed up" by the
taxing ability of our government. Well, our government, for the time being, is
not going to tax the people or entities that have the most money. Lower paying
jobs available to US workers mean a smaller tax draw. Until this changes the
trend for our currency will continue to decline. Please remember, there was a
time when the British Pound was worth about $8.00. Right, one Pound was worth
about $8.00. So how low can our currency go? To the Euro it could go to a
dime. Who’s to say? Until and unless the people get hold of government once
again, corporations will run us right into the ground. And when will the
people be released from the cancer of apathy? You tell me.
CATTLE
Try playing Feb cattle like the low is in for the time being. Support at 8850
may prove to be very strong for now. Be warned, if that level is violated the
fall may be swift and sharp. March feeders may trade between 8900 and 9200 for
awhile.
ENERGY
Crude is caught in a range. Builds in distillates are offsetting draws in
crude. At current price levels I am drawn into the bear camp. Sell into
rallies. Watch TECH DATA for support and resistance levels for guidance if you
need it. Subscribers and clients receive this data daily. Natural gas is
reflecting volatility levels seen only a dozen or so times in a lifetime of
futures trading. Option premiums are so high they beg to be sold. But be
careful. You can lose you home, spouse, children and health. All it takes is
being a little too stubborn, a little too slow and a little too poor.
SOFTS
Cocoa may have found support at today’s low basis March near 1648. If not then
expect a test of 1600. If support under March coffee at 6200 fails then 6100
becomes targeted. A test of 5980 closes the gap left on the way up.
Consolidation on the daily chart of March sugar measures up to 695 on the next
leg up. Support is fairly strong at 665 for the time being. Cotton is
consolidating. Fundamentals remain bullish through the season. Technicals are
the weak point. Don’t get in the way of a drop in price. Buy it on the way up,
not down. I am pretty sure some OJ traders are waiting for me to throw in the
towel so price can go up. It ain’t going to happen. We have been fodder for
some of the locals (or so it seems) long enough. Sell the March 7000 puts and
keep them through winter. If you get assigned you will be long from 6600.
Check out the charts, that’s pretty cheap to be long from.
GRAINS
Well, is it accumulation or distribution on the bean charts? A bounce in the
buck can mean a break in beans. Take it day to day. Corn fundamentals are
shaping up for a bullish run. Buy breaks. I am long July wheat, so I think
it’s going higher.
CONTACT ME: williamfrost@comcast.net
or call 615 331 8567.
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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.
