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Cotton market settles for low volume narrow trading range
19
Jun '08
After several volatile trading sessions, we settled into a low volume narrow trading range today between 80/82. We did settle on the high end of the range after testing the lows overnight, but the market feels like it wants to consolidate at these levels and possibly test the highs a few more times.

We feel like there is strong enough resistance and trade selling above the market to keep prices in the recent trading range up to 85 cents or the 50% retracement level. Volume was much lower today with only 20,000 in futures and 24,000 options as the market looks like it is waiting for fresh news to trade.

Export sales tomorrow should be lower than last week as demand has come down considerably based on the higher levels in NY. Good precipitation is helping the growing conditions in West Texas and we are not getting too much help recently from other commodities prices.

There is quite a bit of technical congestion above 82 cents and we should continue to see good scale up selling from the trade. Bullish options kept the market supported on dips, but we also had good resistance on the highs which may be setting up for further testing of this range.

Technically, the market still looks friendly, but we could be getting a bit overbought as we are setting up for a seasonal high in the short term. The 9-day MA is getting ready to cross the 50 day moving average so this may set up for more underlying support.

We are getting some rain in West Texas and if anything the cooler temps this week are helping the 20% of poor and very poor cotton in the dry land areas of Texas. Cotton will continue to follow the other commodities prices higher as the dollar and equity markets struggle. Market is finding good resistance at these levels and will have to wait and see if it can break through or we eventually come down.

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