FROSTY FUTURES JAN. 29, 2004
TECH DATA FOR FRIDAY JAN. 30.
DOW R=10540; 10565; 10632. S=10445; 10415; 10340.
SPX R=1139; 1145; 1155. S=1128; 1121; 1118.
NDX R=1513; 1526; 1532. S=1485; 1475; 1470.
MAR TBOND R=11029; 11108; 11122. S=11000; 10916; 10904.
APR GOLD R=401; 408; 413. S=397; 392; 388.
MAR SILVER R=642; 657; 660. S=612; 600; 592.
MAR DOLLAR R=8815; 8885; 8925. S=8735; 8710; 8660.
APR CRUDE R=3255; 3300; 3375. S=3175; 3160; 3130.
MAR NAT GAS R=572; 580; 584. S=558; 545; 525.
MAY BEANS R=819; 833; 845. S=800; 790; 780.
MAY WHEAT R=387; 389; 392. S=383; 377; 372.
COMMENTARY
INDICES
Cash Dow 30 made it to tech target of 10,700 and now has a double top on the
daily charts. Ditto March future contract. Today, penetration of the 30-day MA
and reversal up turns the tech’s up and will give traders confidence to try
that level once again. Resistance is layered, see TECH DATA for those levels.
Failure to begin the day on an up note may chip away at confidence quickly so
be prepared to take advantage of midmorning weakness should that occur. There
are some subtle differences between the Dow chart and the NDX and SPX, but not
enough to worry about. If one fails they all go, particularly if lead by the
Dow.
INTEREST RATE
The longbond presents a classic double top on daily and weekly charts. This is
a very potent formation. Unless some surprise news comes out that is very bad
for the market, I doubt that we will see Mar tbonds above 11200. And I hope
they don’t get that high. I sold the Mar 112 calls today for 38-42 and I
expect to keep the entire premium, but as you know "the best laid plans of
mice and men oft go awry."
METALS
Gold didn’t quite get down to the 100-day MA at 395 basis Feb, 397 basis
April, but it got close. Tomorrow should see that test. Silver only went
through the 10, 20 and 30-day MA’s but came back to close above the latter.
This puts it on the bottom of the consolidation pattern established the
beginning of the month. High Grade copper barely moved compared to the
previous two. Should the metals markets regain some strength, copper could
pull a real surprise rally. It didn’t make the potential it had to rally into
monthly resistance near 120 but it still has that level in sight. Much depends
on the Dollar and copper demand worldwide.
CURRENCY
The Buck doesn’t want to stop here. At least it doesn’t want to stop going up.
Should we see a close above 8817, particularly at week’s end, then you should
expect another leg up. Keep in mind that I am not backing away from my earlier
statement that we might see a 25% correction of the entire down move. From the
current low, that puts the target around 9400.
CATTLE
Live cattle are back in a small downtrend. Lack of export demand undoubtedly
is hurting price. Cash prices slipped all week evaporating the big premium
cash has to futures. So now, cash price is "pushing the string" down. Traders
need to keep in mind that our foreign consumers have our beef industry over a
barrel! And I don’t care how powerful the beef lobby is in Washington, beef is
a luxury item in most of the world. So, if we want to sell beef abroad there
are going to be some mighty concessions given in other areas. Our leaders may
not be willing to make those concessions. Note that in Canada the government
has already stepped in to support cattlemen. Feeder contracts have not seen
the weakness in demand as has cattle futures. But the pressure is on and trade
is thin.
ENERGY
Crude got higher than I thought it would and stopped me out. Now I have to
regain my balance and try something new. I can’t really tell yet where support
is, but I am looking in the area of 3200-3100, but a trend line from Sep’s
lows comes into play near today’s low. Give me a close below 9100 on March
Heating Oil and I’ll call a top. But it will take a close below 9300 on March
Unleaded to confirm.
SOFTS
Cocoa may be traveling between support and resistance, a band going from
1500-1680. Responding to the decline in coffee production in Vietnam the
market rallied nine-cents higher than I thought it would. But the daily chart
now shows an island reversal down and that should be worth a short sale. Sugar
support is being threatened by negotiations at WTO. Our sugar industry,
propped up by the taxpayer, is up in arms big time as attempts are made to
allow larger imports of sugar into the US. I can’t see it going anywhere much
until that issue is resolved. China’s absence from the cotton market has
removed much anticipated demand. Hence, price today dropped below the 100-day
MA. OJ is back on base support price level. What from here, I don’t know but
it sure is cheap.
GRAINS
Beans are beginning to show some weakness as harvest pressure looms ahead in
Brazil and a little later in Argentina. I expect to see a trading range in
March and May bean contracts to be in the vicinity of 50-cents between
830-780. We want to watch the area around 265 March corn. A close below that
and a new range will be established in that market. Wheat is vulnerable to a
drop to test 360 March. It takes a close back above 390 to eliminate the risk.
CONTACT ME: williamfrost@comcast.net
or call 615 331 8567.
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