FROSTY FUTURES

JUNE 17, 2005

INDICES

Dow has taken out resistance and also has established a new target at 10,715. Support should be strong at 10,547 next week. S&P has a new target at 1227 with support next week 1206-1205. NDX is presenting a weak picture but could be pulled higher by the Composite, should that index be able to close a couple times into the 2100 numbers. Absent that there is a potential for a double top to form which could be disastrous for the market.

LONGBOND

Last week I pointed out to you your short positions (recommended here the previous week) would find support at the .318 retracement level near 11523-20. Wednesday’s low at 11526 may be as close to that target as it gets, unless the old 25% retracement level (the first target given you week before last), which is now apparent resistance, holds. So if the area around 11700 is resistance we an project a new low beyond 11523-20 down to the 50% retracement level at 11412. Any questions? Let me know.

DOLLAR INDEX

Triple tops are more often than not, not tops. But they are tops often enough to have earned that title. That is the case we have to deal with today. Has the Dollar topped out? There is a lot of magnetism around the number 8620. That’s my bet.

METALS

The gold bugs jumped on the market this week, and once the move started it gained momentum very quickly. Lots of cross currents coming into play from Euro-players, inflation hawks, cross-rate traders and who knows what else. Support is good at 429, but it may be better at a higher level, also. If the pattern on weekly charts is valid then there is a pennant developing and price is at resistance. A blowout move higher can propel price to 490. Early this week and the latter part of last week was the time for silver to check out support. That area around 725 proved to be strong enough for a new rally to begin. This week’s close was technically friendly and indicates a potential for a run to 810. If the market avoids a close below 725 support, odds for a significant rally improve. A target on the copper chart is 164.

CATTLE

Live cattle contracts overshot the mark I left for you to trade from last week. A friendly cattle on feed report will rally price off that target area. I would be surprised if August cattle can rally above 8250, but there might be consolidation for the rest of summer as doldrums set in. Feeders didn’t give you much of a chance to buy any put options with the gap down on Monday. Let the feeder players pick one another’s pockets. We can find better markets to trade.

ENERGY

Here is a better market to trade. Price this week overshot a target I presented to you last week at 5763. The price pattern indicated a target of 5883 which pretty much capped the market most of today. But near the close a new wave of buying came into play and new highs were made. Odds favor those left long over the weekend will be disappointed come Monday morning. The Sep 50 puts are plenty cheap from this level and even if I’m wrong on timing and crude continues higher the Sep options will maintain high premiums.

SOFTS

Last week’s support under coffee gave way and the targeted 106 level was tested. It may not be over yet. Be patient, trend is for lower price, let a pattern develop before stepping in against that trend. Somehow I missed a cocoa comment last week. A breakaway gap is in place with support at 1500. Hourly charts are in a pattern that indicates a high likelihood of resolving to the upside next week. Sugar continues to consolidate but the original target I gave you at 920 still holds. The close at 867 did nothing to destroy the bullish pattern and the reversal from that level indicates underlying strength. Cotton continues to consolidate and there was a hint at improving manufacturing as the NY manufacturing number was a positive. A greater impetus is needed to kick demand into gear. All the talk about spreading July-Dec is an indication of marking time and pocket picking by floor traders while they await something to grab on to. Be cognizant of quick moves outside the boundaries of the current pattern and then a reversal. The boys in the cotton pit are notorious for head fakes. The technical target was 4601, the current low is 4610 on the 9th of June. It has consolidated since. OJ is setting up for a rally. The target remains 105-110. Support is 9275. The in trend double top on the lumber chart indicates a target of (about) 326.

GRAINS

The break out above 695 indicates a good run to 732. Dry weather prevailed across the belt and as usual a drop of rain here and there will not kill the bull. Corn overshot its mark at 222. So support for beans should be 690, and for corn its 222 mark. In a weather market all the rules are out the door, so if you play in these pits, be ready to change in an instant, never trade without stops and take profits when you have them. A bullish development in wheat should put soft red at 361.


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 just that. Nothing herein should be construed to be a solicitation to trade futures or options. Hedgers should have a defined plan.