FROSTY FUTURES

JUNE 30, 2005

Independence Day holiday coming up, this is a day early and a dollar long.

INDICES

The Dow is consolidating after failing at new highs and dropping into temporary support near the 100-day MA near 10,227. See last weeks comments for other levels of support. S&P support remains near 1187 and 1177, with resistance near 1203. COMP had a poor close and it won’t take much pressure next week to see a test of 2025 and maybe 2005. Resistance, should the market try to rally, will be found at 2073. www.frostyfutures.com.

LONGBOND

The key reversal of June 3 offers a target (11923) that may be out of reach. However, a close above that level opens the door for a rally to 12026. Good support should be found near 11613-12.

DOLLAR INDEX

Dollar longs won’t give up easily but unless the current pattern resolves itself to the upside within the next few trading sessions a correction to the aforementioned target of 8620 will be forthcoming. The upside target is 9096.

METALS

Gold is under pressure and may find support between 435-432. Resistance is now strong at 441. Silver has slipped lower faster than gold and if there is support nearby for the white metal it should come into play at 695. Resistance is 725-730.

CATTLE

A friendly cattle on feed report was offset by the report of a new case of BSE. The result has been price slippage, albeit not much. Summer doldrums, increased supply and a latent fear should combine to force price lower, particularly at the butcher counter. Be that as it may, it will probably be the rancher that suffers more than the consumer. Lack of profits should slow the demand for feeders and we should see feeder contracts stair step lower over time.

ENERGY

The pivot area for crude price is near the 5300 level. We have had a very predictable three-days-down. So a fourth day may begin a trend to test support at that lower level. Should the market head lower an important tech support level at 5495 will offer day traders an opportunity to cover and sell the bounce. Spread traders should keep an eye on the price differential between heating oil and unleaded. There are some very good trading opportunities coming up.

SOFTS

Cocoa suffered from liquidation, in my opinion, from fund selling commodities in general. Commercial traders will stand aside, as they have done this week, until spec longs have liquidated and prices have reached super value days. Same deal for coffee and support should be found between 9500 and 8500. Sugar is forming a top. Tech target at 920 has been exceeded and a consolidation pattern has become apparent. Unless demand for sugar is very strong I expect price to follow the course of cocoa and coffee. Manufacturing numbers are strong and so it goes with cotton. As long as demand remains strong support from commercials may exceed liquidation from speculators. Expect buying power to run dry between 5600-5800. OJ will not be able to overcome the liquidation phase of this cycle. So my original target of 105-110 will have to wait until the next cycle before coming back into play. The double top on daily charts and the gap down indicate a high likelihood of the market testing 9250-9000. Use further declines, on active days, to purchase call options in Lumber. The Nov contract should be far enough out.

GRAINS

It was a nice run while it lasted. Cooler temps and some rain took the edge off demand and liquidation has set in. A resumption of hot and dry can still damage the crop but by this time of year the damage has for the most part been discounted by price and it’s a sucker game from here on out. Typically there is quite a bit of volatility in July and August, but in the absence of a real weather problem prices usually trend lower.

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.