Very quiet day of trading compared to the volatility in the last several weeks for cotton. Wheat as well as gold did perform very strong today along with a bounce back in the stock market who is counting on further cuts by the Fed on Wednesday.
Cotton did find some friendly option activity on the lows to make a late morning run where it closed near the highs of the day. Volume was below average with only 16,000 futures and 6,000 options as the market looks like it may want to test the highs short term.
We received the report that the specs lowered their long position to 25.3% on a combination of lower open interest and profit taking from the highs last week. We still feel short term, the market feels range bound as it will be tough to find any considerable sized demand with Chinese New year ahead and rumors of extended mill closings.
Along with falling volatility, the market looks weak and may go lower long term as we get closer to FND for H'08 (2/25/08). The technicals look like 70 cents will have good resistance at the gap as well as 78.00 cents for Z'08. Please see our proposed trading range for the Z'08 over the short term on page 2 in attached PDF.
RSI is at 50 and prices are holding the low at the 50-day moving average near 67.00 as this trade channel should hold up short term. The grains and other commodities are finding some strength along with a weaker dollar. U.S. stocks were up today looking for further rate cuts at the Fed meeting on Wednesday, but we are still in a bear market as Asia and Europe were off overnight.
Demand remains slow, but this week should be a more friendly export report and the specs did lower their spec long position as well.
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.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "UBM China (Shanghai)")
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