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Weak Asian & EU markets push cotton lower
21
Feb '08
Most commodities were down overnight following weak markets in Europe and Asia which pushed cotton lower before the opening. After the open, grains fell even further down and that allowed cotton to fall to the lows of the day. However, we slowly bounced back on friendly energy and metal prices as well as the equity markets near the end of the day.

There was also a good volume of calls rolled up in Z'08 from 75 to 80 cents near the end of the day. This fueled the rally which raised us almost 200 pts off the lows and broke through some upside resistance near 78.50. Volume was strong again today with 42,000 futures and 24,000 options as we are winding up the H'08 expiration with only 20k left as of this morning.

New sales remain slow as the market is holding firm at the top of the range we have been trading over the last six weeks. The Fed gave a very negative report on inflation and the housing crisis which gave more fuel to oil prices which settled above 100 usd a barrel.

The CRB continues to trade near the highs as we also managed to get the stock market to close near 12,500. Cert stocks are growing back close to 500k with over 60,000 awaiting review and looking less like a stopper will appear after FND. Regardless of the fundamentals, the technical picture looks positive and we continue to follow the firm commodity markets which refuse to cool down.

Technically, we remain confined to the familiar range we have been trading for several weeks. We erased all the negative technical resistance from Friday, but were unable to take out the recent highs set last week as we run into good scale up trade selling with Z'08 near 79 and K'08 near 72.00. The market continues to move sideways as we get closer to H'08 expiration.

RSI is back above 50, but certainly not showing signs of being overbought as we should continue to see the market trade in the current range until H'08 expires.

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