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Cotton markets ignore bearish USDA report
12
Dec '08
Cotton ignored the bearish USDA report as the dollar fell hard and triggered a commodity rally. However, today the USD broke the downside of the range and fell over 2% as the stock market was also under pressure most of the day.

The House of Representatives passed the Auto Industry bailout last night, but we still have to get through the Senate and the odds are not looking good. On top of that, the stock market could not follow through as there is still concerns over how things are going to go with the bailout. Volume was a little higher today with 7,000 futures and 3,000 options as open interest stays very quiet at 130k.

Sales were very light today with only 100k and the USDA numbers were bearish as well as you can see how ending stocks grew higher with the breakdown on page 2. The range looks like it may remain in place but energy and metal prices were very strong today and if this continues then grains and softs should follow higher.

The momentum at the moment seems to be negative for the dollar and positive for equities and commodities. Have to see how the foreign markets react overnight but they also are moving higher at the moment.

Technically, the dollar is establishing a sideways trading range between 85/88. The stock market also started the week and seems to be heading for a strong finish after such a poor performance over the last 6 months.

Cotton is starting to build a sideways trading channel 40/48 as we may be testing the bottom of the range for the short term. RSI at 47 and the moving averages are getting closer so we may keep trading sideways.

EcomUSA

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