FROSTY FUTURES THURSDAY FEB. 26

TECH DATA FOR FRIDAY FEB. 27.

DOW R=10616; 10670; 10722. S=10540; 10500; 10450.

SPX R=1147; 1152; 1160. S=1139; 1135; 1129.

NDX R=1481; 1488; 1500. S=1461; 1452; 1444.

MAR TBOND R=11314; 11318; 11322. S=11214; 11130; 11118.

APR GOLD R=398; 404; 408. S=392; 390; 387.

MAY SILVER R=676; 682; 692. S=650; 631; 625.

MAR DOLLAR R=8815; 8880; 8925. S=8725; 8690; 8625.

APR CRUDE R=3590; 3615; 3635. S=3510; 3450; 3400.

MAY COCOA R=1590; 1620; 1670. S=1550; 1475; 1450.

MAY BEANS R=930; 937; 947. S=910; 895; 884.

MAY CORN R=304; 309; 313. S=297; 292; 285.

COMMENTARY

INDICES

Dow, after completely fulfilling its technical target (10,700) established over the previous few months is backfilling, waiting for money flow to determine its next direction. A week’s end close above 10550 maintains a bullish bias and indicates an odds on attempt next week to take out the highs near 10750. A failure at this juncture would likely stimulate a negative money flow (more selling than buying) and test support at a few points down to 10300 area. A word of caution is warranted at this point because there is very little support between 10300 and 9900. SPX resistance appears at 1060, while trend support to maintain a bullish bias is a week’s end close above 1048. A big break should find good support near 1070. NDX needs a close above 1485 to maintain a bullish bias because the current price is below 10, 20, 30 and 50 day MA’s. A week’s end close below 1450 opens the floor for a drop, possibly as low as 1360.

INTEREST RATE

The longbond is reflecting a slow economy. It is ignoring soaring copper, crude oil, and unleaded gas and heating oil prices. My own strategy has become to sell out of the money puts and calls, 30-days or less out to expiration. Don’t get greedy and sell options too close to that day’s price. Instead, look at the range and sell at the edges.

METALS

Gold and silver tested new lows today but rallied into the close. If the rally came from currency intervention, I have not found out. Gold support is 390 resistance is 405. Silver had a very exciting range today finding support during the last hour of trade. Total range from top to bottom to top was about 90-cents. Very unusual, to say the least. I thought we had a blow-off top going on in copper but such was not the case. Rather, there is consolidation. This indicates a potential for even higher price.

CURRENCY

Resistance on the buck at 8800 appears tough. Should the coiled spring project price up, my previously stated theory of a 25% rally of the previous 2-year move is back in play with a target of 9500.

CATTLE

April fats are now in play with resistance heavy at 7750. But the large discount of futures to cash should indicate good support. We are in a strong seasonal period for prices therefore it should be awhile before having to worry much about a substantial break, absent another case of BSE or some other catastrophe. Good support for feeders should continue, albeit affected by corn, meal and cost of money.

ENERGIES

The charts appear to me to be reflecting a period of large traders supporting price out of fear rather than tight supplies. How can I come to that conclusion? It’s a fair question. My answer is that volume hints at manipulation. When markets rally strongly on average or below average volume something is up, beside price. If you are ballsey, sell into it, if you are not but want to trade in the energy market get stopped into shorts on the way down. Keep in mind that many airline carriers are not hedged and this rally could be an attempt to get the airlines to throw some money into the hedge market before price collapse. Don’t doubt for a minute what the traders in New York are capable of. So if they can use OPEC’s jawboning to stimulate more hedge business believe me they will.

SOFTS

All of the softs rallied except OJ. Imagine that? Sugar is approaching 650, cocoa is still mid-range as is coffee and cotton. There is upside potential. Probably not much in OJ to look forward to.

GRAINS

Not much new to add. Beans may have reached a temporary high as corn needs to validate its new breakout price. There may be some profit taking on long bean, short corn spreads, but I wouldn’t expect much in that regard. Fundamentals are good for both corn and beans so I would just expect the normalization of the corn-bean ratio, which has been about 2.5 to 1 over the years.

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.