BARRY PARKER - FREIGHT FUTURES

BARRY PARKER - FREIGHT FUTURES

PRICES OF OCEAN FREIGHT FUTURES CONTRACTS moved up last week, but the closely watched Julycontract failed to break above an important psychological barrier.

Chart analysts have been watching closely to see whether the July contract would be traded up to the 1150 level, roughly 150 points below the spot Baltic Freight Index. Had the price broken above this so-called resistance level, it would indicate to analysts that sentiment about the summer months was taking on a more positive hue.My impression, shared by a few of the other brokers, is that any rise in the spot market over the next week or so will be little more than a hiccup.

Traders who have tried to use patterns from previous years to trade the market have not had a great deal of success. Traders were quick to sell the market off this year, even before it was clear how low the spot rates would go. Their aim was to move in advance of the crowd action that in 1988 and 1989 caused a spate of maximum daily price declines, known as "limit down," as the summer slumps of those years began.

It is increasingly clear that the smart money this year remained on the sell side of the market, even before the big dip began. Traders who sold futures contracts, known as going short, have since bought some of their contracts back, taking profits, and are now looking carefully for the next set of signals.

CLOSING PRICES AS OF FRIDAY, 5/18/90:

BFI Spot Price: 1311 May 1319 June 1231 July 1130

Oct. 1225 Jan. 1253 April 1265