FROSTY FUTURES MAY 20, 2004

TECH DATA FOR FRIDAY MAY 21.

DOW R=9990; 10080. S=9900; 9850; 9730.

SPX R=1094; 1098; 1104. S=1085; 1078.

NDX R=1408; 1418; 1426. S=1392; 1379; 1368.

USM R=10519; 10616; 10712. S=10416; 10320; 10302.

GCM R=384; 388; 395. S=377; 373; 371.

SIN R=594; 615; 630. S=577; 566; 551.

DXM R=9145; 9180; 9245. S=9065; 9010; 8960.

CLN R=4130; 4175; 4200. S=4030; 3985; 3850.

SN R=880; 890; 900. S=850; 840; 818.

CN R=299; 303; 309. S=288; 285; 277.

WN R=379; 385; 387. S=365; 357; 351.

COMMENTARY

INDICIES

Nothing new in any of the three (DOW, NDX, SPX). Still in consolidation. Money is not sure in which direction to go. Until that decision is made, it’s more indecision.

INTEREST RATES

My expectation for high volatility in the long bond following the economic reports didn’t take place. The info came out, the market took a long yawn, and rates dropped a trifle. Please note that after last week’s column in which I mentioned that money managers were not to be too quick to liquidate their bond portfolio’s selling stopped and either some short covering took place or some new buying came in. Whatever the case, you received advance notice if you read FROSTY FUTURES. I know, but what have you done for me lately? Follow "Tech Data" daily for indications of things to come.

METALS

Like stock and bond charts the metals reflect a period of consolidation. There simply is nothing more to say.

CURRENCIES

The trend on the Dollar chart is still up, but underlying technicals are weakening. There is divergence on several important indicators. It could be that 9250 is as close to a 25% retracement as we are going to get before the Buck resumes the downtrend.

CATTLE

If August live contract closes above 8600 step aside from shorts and re-enter on a subsequent rally. No reason to abandon the short side of things, just don’t be stubborn worrying about a commission. Feeder contracts are saying live cattle are going much higher. But feeder speculators are notoriously wrong. It’s a thin market and the insiders can turn on a pinpoint, much less a dime.

ENERGY

OPEC members tell us they are producing enough crude to keep price between $28-22/brl. Domestic energy analysts say it’s a problem of tight supply and lack of refinery capacity. Market analysts tell us its speculation keeping prices high. Take your pick. I keep with my own theory that the money is going to be made on the short side between now and Christmas. I still can’t get any Dec 29 puts purchased for 40-cents. Can’t figure why,,,,can you?

SOFTS

We have a good strong breakout in cocoa. The target is about 1540 on the July contract. Support is about 1355. Coffee has hit resistance near 7300 and will have to find justification for follow-through. It may take some days, or a freeze scare. Sugar continues to float along above the 100-day MA. Technical indicators are weakening, so unless some fresh bullish news comes into play quickly I expect price to decline in the near future. Bullish cotton traders may not be paying enough attention to the slow-down in China. If they don’t come back to the buyer’s ring, cotton continues to slip.

GRAIN

Old crop beans will remain under pressure, if not for one reason then for another. New crop will be the determining factor of price until China steps back into the buyer’s ring. Sound familiar? Ditto corn. I thought wheat might be able to avoid a decline, but all in all it’s as weak as the corn and beans.

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.