FROSTY FUTURES THURSDAY FEB. 5.


TECH DATA FOR FRIDAY FEB. 6.

DOW R=10525; 10575; 10620. S=10450; 10410; 10325.

SPX R=1132; 1138; 1142. S=1124; 1121; 1115.

NDX R=1476; 1485; 1489. S=1460; 1448; 1440.

MAR TBOND R=11118; 11129; 11208. S=11025; 11018; 10916.

APR GOLD R=402; 404; 408. S=397; 392; 388.

MAY SILVER R=623; 632; 641. S=608; 602; 588.

MAR DOLLAR R=8725; 8780; 8820. S=8645; 8575; 8550.

APR CRUDE R=3280; 3360; 2400. S=3190; 3160; 3100.

APR NAT GAS R=536; 540; 550. S=508; 501; 488.

MAY BEANS R=832; 850; 855. S=818; 806; 795.

WK R=389; 396; 403. S=380; 377; 372.

COMMENTARY

INDICES

Stocks are marking time after hitting the technical target on Dow 30 Index at 10700. Now it becomes a matter of needing fresh information, which may be at hand tomorrow (Friday) morning. One level of resistance to watch for on the Dow is 10660, and support at 10340. SPX band may run 1145-50 on the high side to 1112-1108 on the low. NDX offers a much broader band between support and resistance with the potential on the high side to reach1500-1520 and on the low side down to 1440-1420. You may consider fading the extremes after the news is out and evaluated.

INTEREST RATE

Treasury bond options present a very balanced picture going into tomorrow’s data. I favor the bear side of price but admit the bias is mostly personal looking at what appears to be a recovering economy, a fairly broad and even distribution of opposition to the current administration and the huge and growing debt. One catchy little phrase being bandied about is "debt distribution" and if one thinks about it that might not be a bad concept. What can possibly be the matter with adding to consumer’s personal debt load the additional weight of more government spending under the name of SECURITY?

METALS

Some say the huge open interest in gold needed to be relieved so some liquidation is taking place. Look at a monthly chart and you can see the spot gold price is vulnerable to a setback into the 385 area without doing any damage to trends. A drop to 375 may get some weak handed stops but as soon as they are wiped off, the market should come right back to test 400-425. Naturally, a good part of this is dependent on action in currencies. More on that down the line. Silver is meeting support at the 595 level for the time being. It will take a weekly close below that to put traders on the defense. And even at that not necessarily bearish, once again dependent on the Dollar. Copper just keeps inching up toward the 120 level. That is just a technical target so I don’t know what will happen, when/if it gets there.

CURRENCY

The Dollar bounced off a support trendline today. How long will it take for real issues to come back into play, i.e., fundamental problems with our tax base, debt load, free trade and IMF/WTO/US Treasury Department issues? For now the Buck is in consolidation and until it breaks out one way or the other look for a continuation, probably with an upward bias, of it.

CATTLE

According to Senator Laschle (sp?) there is huge tonnage of beef afloat waiting for an OK to land at some foreign port. Country of origin labeling is the issue. If those ships make a move back to a home port, the market will collapse. And there lies the fear factor.

ENERGY

Crude now appears to be in a three-dollar range bound by 3250-3550. Overproduction is now being touted. This sets the market up for a good rally from 3550 resistance or a good break from 3250. The edge seems to be taken off demand for natural gas. That is until another cold blast comes into the Northeast. A way to play this might be bull spreads, but you will run into notice day problems if not careful.

SOFTS

Cocoa is in a descending pennant formation, not resolved to breakout up or down. The sooner the breakout the more the following move. Go with it. Coffee found support near 7100 but the charts look toppy. Expect a break of support and a test of 6500-6400. No satisfactory resolution in sugars, hence the break. Look for a test of 520 on nearby. Cotton may have found support on a domestic basis, but for export we have to wait for the report. I can’t help but believe this cattle labeling deal is going to play into China’s demand for cotton and beans. OJ is back into base building, damn the diet. Brazil and Argentina have huge bean crops.

GRAINS

Current rallies in beans on the CBOT, I think, should be treated with skepticism. Weak dollar, good demand and expectations for more good demand may have this market a little too optimistic. Corn remains cheap on a comparative basis to beans so there should be good support for corn price as long as beans don’t bite the bag. And CBOT wheat should maintain strength above 360 and might have a hard time penetrating 410. KC wheat should gain on Chicago soft, according to Refco and other analysts. See what happens. A fifty-cent call option spread, either May 380-430 or May 390-440 for around 15-cents might be a good play going into March and April.



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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.