According to a business daily , “U.S. leading indicators steady. The Economic Cycle Research Institute's leading index was flat at 107.2 in the week ended April 17. But the index's annualized growth rate rose to -18.6% - the highest since early Oct. – from -19.7% the previous week. 'With WLI growth rising to a 27-week high, U.S. economic growth, which is now at a record low, will soon begin to improve,' said ECRI head Lakshman Achuthan.”
A second article from daily said that, “U.S. households and financial firms must cut debt before the economy can recover, said Bank of Japan chief Masaski Shirakawa. 'This will be painful but inescapable,' he said. 'In view of Japan's decade- long experience, there are no palpable alternatives.”
Daily also reported that, “German corporate sentiment is up. The Ifo business climate index rose to 83.7 in April from March's 82.2, which was the lowest since reunification in 1990. April's level was the highest in 5 months and raised hopes that the recession in Europe's largest economy may be easing. The current conditions index rose 0.9 point to 83.6, the first gain in 6 months. The expectations gauge rose 2.3 points to 83.9, the 4th straight rise.”
Momentum studies are trending higher but have entered overbought levels. The market's short-term trend is positive on the close above the 9-day moving average. The market has a slightly positive tilt with the close over the swing pivot. The next upside objective is 53.61. The market is approaching overbought levels with an RSI over 70. The next area of resistance is around 53.28 and 53.61, while 1st support hits today at 52.12 and below there at 51.29.
So where do we go from here? The market has gone up 10 cents with relative ease, but now it will have to prove itself. Resistance from the cash market is getting stronger at these levels as mills are not readily accepting these higher prices while supplies are still ample. It will take some momentum to carry the market to the next level, but as we have shown in the above numbers, the shorts are fairly vulnerable at this point and it may not take that much new buying to force the issue.
The fact that prominent hedge funds are sniffing around in the cotton market is a sign for caution. We all remember what happened the last time around. Although we are still leaning towards a range-bound market at the moment, albeit at a somewhat higher level, the set-up for an explosive break out is certainly in place.
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.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "UBM China (Shanghai)")
-Ltd..jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Thermore (Far East) Ltd.")
