FROSTY FUTURES

JULY 17, 2005
 

INDICES

All indices are in positive territory and there is no obvious reason for them not to go higher. No RSI indicator is overbought. So it’s just a matter of cash flow. If the cash come in, the market’s go higher. It ain’t rocket science. The fact that the major indices are near resistance is food for thought, but trends last longer than you think they will, and now trends are positive.

LONGBOND

An inverse relationship with stocks. As the stocks have risen bond prices have declined. Here price is near support, and that is food for thought. But the trend in rates, for now, is higher.

METALS

Gold is within a couple bucks of a low, from the lows of last week. There is a lot of talk about continued strength in the Dollar, but that talk has been coincident with the rally in that currency, not a leading indicator. I can’t see any reason not to expect a continued choppy market with ample trading opportunities. Ditto silver with the added recognition of the white metals connection to industrial usage. Copper remains strong with a tech target of 170.

DOLLAR INDEX

RSI indicates a fall is imminent. That indicator is far from infallible, but I expect in this case the call is correct. Rationalize it any way you want because all the rationalizations warn of weakness. Just use stops and be prepared for traders to take swipes at stops above easy resistance. I know, it sounds contradictory, but if it were easy, anyone could do it.

CATTLE

Continued stair-steps down, in live and feeder pits. Some ranchers are hoping a new paradigm exists. It is a false hope. Seasonal shifts will still exist to some extent, but the era of 85-90 dollar cattle and 110-125 feeders is over.

ENERGY

With sufficient hurricane fear energy should be fairly well supported through the season, but use the rallies to sell into. Use good sense, but there it is. RSI has rolled over on the tech side of things and on common intuitive ground I find it interesting to see the number of troopers and cops on the highway giving tickets to motorists as the dichotomy of driving trends become more of an issue. The motorists who are price sensitive to gas are slowing down, interfering with the drivers who are not price sensitive to gas. This is creating danger and the highways need to be better controlled. And the coppers and doing just that.

SOFTS

Cocoa appears to be bottoming, but a close below 1400 could lead to a drop to 1200 with no interference. I’d try coffee from the long side with stops under 104, or better yet, wait for a test of the 104 area and then try the long side. That may save you the trouble of getting stopped out and then working up the guts to get back in. That being said, there may be no test of 104. Sugar is in a grind pattern. That means it just grinds higher and higher, but when it turns it will wipe out any and all profits you have unless you are as quick as lightning. This is one market that really slides faster than it glides. As long as manufacturing stays strong the cotton market should remain well supported on breaks, but keep in mind that demand will wane as the 5600-5800 price level is approached. It took awhile for OJ to hit its target up near the 105-110 level but it got there with the print of 108.40. The damn thing wore me out. I hate those thin markets. But if you had the patience for that one, then you can stand lumber. When the Nov contract gets hit with some downside volume, step up and buy some calls. Lumber should go up to test 390-400.

GRAINS

Beans will meet resistance in the area of 733-737 spot month, Nov near 755. Sell rallies after an initial strong opening. Wait until you see things soften before entering. New corn at 275 is going to look high. If soft wheat gets back down to 325 you can give the Sep contract a shot from the long side.

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

TO SUBSCRIBE: www.frostyfutures.com.

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.

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

TO SUBSCRIBE: www.frostyfutures.com.

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.