FROSTY FUTURES JUNE 3, 2004

TECH DATA FOR FRIDAY JUNE 4.

DOW R=10280; 10295; 10310. S=10190; 10120; 1100.

SPX R=1125; 1129; 1137. S=1114; 1110; 1104; 1095.

NDX R=1455; 1465; 1470. S=1440; 1427; 1408.

USU R=10417; 10516; 10528. S=10400; 10324; 10300.

GCQ R=391; 394; 397. S=388; 386; 380.

SIN R=582; 588; 608. S=571; 560; 555.

DXM R=8930; 8955; 8990. S=8870; 8855; 8830.

CLQ R=4020; 4080; 4115. S=3785; 3720; 3685.

SN R=818; 830; 846. S=790; 765; 755.

CN R=316; 320; 324. S=306; 300; 295.

WN R=371; 375; 382. S=365; 359; 356.

COMMENTARY

INDICES

The Dow got a little ahead of itself off last week’s rally. Some back and fill type action is to be expected. I think, absent any surprisingly bad news, support at 10100 will hold, if it is even tested. There is some doubt about that. The 100-day MA up near 10400 is a good upside target. It is the 100-day MA that stopped SPX in its tracks. So back and fill action to be seen here, also. NDX penetrated its 100-day MA, and is backfilling to test the combined 9-day and 50-day MA’s. The trend remains down (a slight downward bias) but it is, I think, fear rather than economic fundamentals holding back buyers.

INTEREST RATES

The longbond thru me a curve ball last week. Remember I told you to wait and see what happened up around 10812. Then reports Friday morning threw a monkey wrench into that plan and price dropped a little over two-points by the close. So what have I done for you lately? Well, it’s non-farm payroll and unemployment numbers tomorrow (Friday) morning. My chart appears to be pointing back up in price given today’s activity.

METALS

The yellow metal appears to be testing a 50% retracement of the latest upward thrust. This reflecting the Dollar’s tracking its 100-day MA. The white metal broke hard as buyers were nowhere to be found until bargain basement price was hit. But the logic was the same. The Dollar finding support and holding throws the metal traders off balance.

CURRENCY

And what more can be said about the Dollar Index? For the fifth trading day in a row the 100-day MA has held price. There are no strong winds of change visible to money managers so there are no big inflows or outflows of money. This will change.

CATTLE

Live cattle price shot up again, but I don’t believe this price level is sustainable for much longer. Feedlots are current (no backlogs of overfed cattle) and weights are not too heavy thus supply remains tight. But the cure for high price is high price. Speculators and producers both should be salting some puts away in the distant months. And some puts in the August contract wouldn’t do any harm, just in case.

ENERGY

Crude bulls will not be giving up on higher prices until price fails under the 3800 level. Then I doubt if you can avoid the stampede as longs exit the market place. I have repeatedly told you to beware of one of the biggest bull traps in history. Think, if you were sitting on an oil patch and could hedge in a profit of ten to thirty dollars a barrel all the way out to 2009 would you? Well, they are. And now they are pumping the hell out of it and not reporting all that is being pumped. Avoiding a big drop in price is like avoiding winter in Nebraska. Good luck.

Enough for today…read some others.

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.