FROSTY FUTURES

JULY 8, 2005
 

INDICES

The lows Thursday, reversal and follow-through Friday may be interpreted as bullish. I’m not sure I buy into the idea at this time. I’ll send you a note early next week (check here for follow-up).

LONGBOND

It’s stuck in the middle. Maybe it’s the threat of the hurricane, maybe it’s the threat of terrorism, maybe both, maybe confusion from Greenspan. Whether I look micro or macro it’s non-determinate.

DOLLAR INDEX

I mentioned a target of 9096, this week’s high was 9066 from which the market began a reversal. So far, there has been no follow-through on the downside. But that may be only because the market closed midrange.

METALS

There should be good support at 425 or so for gold. Locals may go after stops below that level but good demand should bring it right back up. Silver is finding good support at chart levels unsurprising. Copper making new highs has to be taken into consideration.

CATTLE

Range bound trade in the live cattle contracts should come as no surprise. However, the rally in Feeder contracts surprises me. I remain of the opinion that these contracts will stair-step down over the coming weeks.

ENERGY

Why crude would close on the daily low on a Friday in front of a big hurricane is a wonder. Longs couldn’t be getting scared in this atmosphere, could they? I think so. And if Dennis turns either East or West of the projected path into the oil fields of the Gulf then Monday will be a big down day in the pits.

SOFTS

Short covering Friday in the cocoa pit doesn’t break the trend to lower price. Coffee is nearing support around the one-dollar level. There might be a spike down to the 9800 level. Next upside target on sugar is 980 with support near 940, the old resistance level. You can see demand waning for cotton as it neared 5600. There may well be some further attempts to get into the 5600-5800 level, but rallies should be sold in this area. And isn’t it just like a thin market like OJ to fail near a target, set up a reversal and then reverse that? The 105-110 target is being met, but with the hurricane and disease being a double whammy, we will see later what is. You still have a chance to get long some Sep or Nov lumber call options, should you choose to try that game. It’s got a good chance of being successful.

GRAINS

The cycle is complete, sell rallies, keep it simple.

CONTACT ME: williamfrost@comcast.net or call 615 331 8567.

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