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Overall momentum of the market shows negative approach

22
Apr '08

Another weak day as we approach first notice day for the May contract on Thursday. Volume was light with 29,000 futures and 12,000 options as the majority of activity was rolling out of may as the spreads continue to widen. Open interest fell to 256k overall as K'08 tomorrow will probably have close to 12k with only 2 trading days left.

Business on this break has started to pick up and the specs have slightly increased their long position to 11.1% from 10.8% last week. The overall momentum at the moment is negative as grains in Chicago also broke some short term support levels and may pull cotton lower through delivery.

Cert stocks continue to grow and this will provide a great deal of upside resistance We still have to wait and see if China and other markets enter the market aggressively based N'08 if we reach the lower 70's. N'08 found good support today at 73.00 and may try to move sideways until we find out who a possible taker may be.

The mood in NY seems to be cautiously friendly as the dollar tries to hold on to some gains from last week and commodities seem to be running out of the steam they enjoyed in the first quarter.

More profit taking selling came in today after the false technical breakout last week. Supported by the overall weaknesses in commodities, NYF formed another negative candlestick in the technical picture. The entire session was trading beneath both the short term and long term moving averages and the RSI is at 39%.

We are seeing a lack of fundamental and technical support in cotton which has been reinforced with lowering grain prices in Chicago.

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