FROSTY FUTURES

JULY 23, 2005

INDICES

All stock markets continue to look positive. Small gains in most indices showed good balance between the negatives and the positives so it will take fresh news to stimulate cash flow one way or the other. To give you some numbers, I would say that a rally that meets an across the board gain in excess of .7% would stimulate new money coming in.

LONGBOND

I think a top in bond price is in place. Current resistance is 11600-11607 up to 11621. Anything higher than that means there is fresh news in the market, we will investigate at that time. Near term target on the downside is 1140.

DOLLAR INDEX

Today’s close was strong and I look for some follow through next week. That being said, I also won’t be surprised if the buck opens lower and sinks under the weight of uncertainty until fresh news comes in to bolster traders opinions. Resistance is strong at 9028.

METALS

Old resistance at 424 is now support, if it can hold. The bulls will be encouraged to add more to long positions if such should be the case. A lower close below 422 will stimulate some liquidation. Silver has established a technical target up near 740. It remains to be seen if there will be sufficient buying power for it to fulfill that technical mandate. Particularly hard for silver to rally if copper skids. Today’s sell off in the red metal bodes ill for industrial demand.

CATTLE

Today’s cattle on feed is bearish across the board. No surprise here. You should be short cattle if you follow this column. If you don’t…sorry.

ENERGY

One of clients has a new mantra, to wit; “They rally crude on Friday’s.” Well, sometimes they do. But regardless, today’s close was not above important resistance at 5890. However, it did rally back above the 50, 30 and 9 day moving averages. We’ll see Sunday night and Monday morning what that means. My guess is there is some minor concern about hurricanes but more about the rate of increase in terrorist activity.

SOFTS

If you can stand a hundred dollar drop in cocoa then sell some out of the money puts. That will get you long just above 1300 or they will expire worthless. Coffee cut through support near 104 like a hot knife in soft butter. Look for consolidation for at least a week or so. Some up after such a violent down. Sugar has met and surpassed technical targets. The trend is up, RSI is pinned. Cotton is on its way back up. No reason to believe resistance will not remain strong around that 5600-5800 level. As long as manufacturing numbers remain strong there is no reason to believe cotton will not continue it pattern of ups and downs. Support between 4800-4600 and resistance as mentioned above. Support for OJ looks strong near 9600 so there may be a retest of highs near 105-110. Lumber is slipping but the options are holding too much premium, so far. Keep your eye on these, and when the premiums slip, get in there and go long. Take a look at the 330’s and 350’s as a measuring tool, then manage your billfold.

GRAINS

Things may be a little low to sell beans for the moment. You did have the chance to get long soft wheat in the Sep contract near 325 as mentioned here last week. Take profits Monday if it doesn’t close above 334. New corn was too high near 275, but at midrange I am in no hurry to act to cover shorts or go long. A Monday close above 253 will force me to cover shorts. Then I will wait on events but my basic strategy is to let the floor brokers and funds and suckers get long and I will short the rally. It’s the end of July. Go back on long term charts and look what happens to markets, most of the time, during this time period.

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.