FROSTY FUTURES JAN. 15, 2004
TECH DATA FOR FRIDAY JAN. 16.
DOW R=10600; 10665. S=10525; 10478; 10465.
SPX R=1138; 1142. S=1129; 1124; 1116.
NDX R=1546; 1555. S=1530; 1522; 1515.
MAR TBOND R=11304; 11314; 11326. S=11210; 11202; 11124.
APR GOLD R=418; 424; 428. S=408; 406; 402.
MAR SILVER R=630; 636; 642. S=618; 600; 593.
MAR DOLLAR R=8700; 8730; 8780. S=8655; 8635; 8610.
MAR CRUDE R=3350; 3405; 3460. S=3240; 3200; 3150.
MAR NAT GAS R=625; 660; 664. S=590; 580; 545.
MAR BEANS R=842; 850; 862. S=830; 820; 816.
MAR WHEAT R=392; 400; 407. S=380; 371; 366.
COMMENTARY
INDICES
The Dow is up almost 3500 points from its low in Sep ’02. Continually climbing
up step by step the "wall of worry" there is no end in sight. Business,
generally speaking, gets better in spite of disappointment from the labor
sector. Once again, we trade markets, not labor. The pattern on the Dow’s
monthly chart indicates a target near 10,700. As we have seen the past week
bull legs are getting wobbly, but at the last minute strength shows up from
money managers and trend is sustained. Resistance on SPX gets strong around
1180. Resistance gets tough on NDX between 1600-1750.
INTEREST RATES
The longbond has broken out of its sustained range and is moving in very
organized fashion, so far, towards its next target of 11400, or thereabouts.
Tests of 11116-11100 should prove to be buying opportunities. My bearish bias
has proven to be incorrect, at least for the time being.
METALS
I doubt that it is coincidence that gold and silver got hit hard as the Dollar
made new recovery highs. I project a 25% retracement of the Dollar’s down
move, which should continue to bring the bear out in metals, particularly gold
and silver.
CURRENCY
Another recovery high in the Dollar index set speculators on a run. They may
not be believers just yet, but if, and as, the buck continues to move toward
its bounce target (25% of the decline) of 9400 we should see some liquidation
in most all futures that the Dollar’s decline has supported. It is true the
chart shows the buck is near some resistance on the dailies. It is unlikely
that nature will take a reverse course until the oversold condition is
relieved.
CATTLE
We are beef-eaters plain and simple. It will take more than one case of Bovine
Spongiform Encephalopathy (BSE) to scare America away from beef for very long.
Now the only thing the industry can do to shoot itself in the head is to
ignore laws about spinal cord and brain tissue being disallowed in the food
chain. For years I have heard from industry insiders how proud they are that
"everything is put to good use but the moo." What’s the old saying? "Pride
cometh before the fall." I still don’t know what to tell you to do relative to
cattle. I’m for letting the dust settle. You do what you want.
ENERGY
I analyzed myself into a bolix in crude. I shorted crude at 3175 and each
dollar up. Then when it broke through resistance at 3425 I liquidated and got
long March at 3440. Bad move. I got whipped but good, and some of my customers
did, too. I hate when that happens, but if you trade futures long enough it
will happen and more than once. So my apologies to any and all that got burned
on that one. What to expect now is a good one. Tight supplies and cold weather
warrant a bullish bias. A weakening dollar warrants profit taking. The trend
remains up but the chop is god-awful. Natural gas is declining into support.
Spreads in options are my preferred method of play but the guys on the floor
at Refco are taking "market orders only." Why I don’t know, but it’s tough to
just hand them an order and let them fill it best/fastest they can. And trying
to get a quote on an option spread is like pulling teeth. In a nutshell they
are telling us they don’t want nor need small speculators. If you can’t do a
ten-lot you can go to hell. Well, they’ll get theirs.
SOFTS
Cocoa appears to be in a small uptrend and now within a three of four day
correction. The upside target on March is the summer high of 1800 unless
support at 1550 is violated. During the past 12 or 13 months coffee has
rallied into its resistance range 7000-7200 four times only to be set back to
test 5600-5500. Coffee fundamentals are hard to come by, at least true ones.
Stay with the technicals and try it from the short side, particularly if the
Dollar continues to gain. Sugar is under fire again and the question is will
support at 565 hold? Next level under that is just 550 March, so don’t get too
"antsy." Cotton is vulnerable to a setback based on currency considerations.
Bulls need to lookout if today’s highs can’t be taken out tomorrow. A clean
break above 7600 puts bears back in the den. The 50-day moving average is
weighing heavily on OJ. A clean break above 6700 allows us to think about
trying for the 100-day MA near 7100.
GRAINS
Beans are in a little pennant formation, from which prices usually continue
their trend, now up. There may be some hesitation because of the
holiday-lengthened weekend. Corn held gains today, but closed below the
opening. Prior to a long weekend this is normal. Watch wheat for a good move
after we come back from the holiday. Price is in the upper third of its range,
showing a not quite so good head-and-shoulders top, almost a triple top. A
rally through resistance projects a move of 20-cents or so. A break through
support and we should see a test of 360 March.
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.
