eCotton managed to put in a strong day after several weak sessions in a row, but the commodity market in general looks like we may be setting up for some sideways trading.
Cotton has good scale down buying under 72.50 while there is good upside resistance above 73.50 . Volume was weak today with only 11,000 futures and 8,000 options as cotton looks unsure of what it wants to do at these levels.
We are not getting news of new sales or stronger fundamentals despite this healthy correction, but are certainly feeling better inquiry this week as sales should start picking up for next weeks report.
The economic concerns of a recession are spreading globally and the housing crisis does not show any signs of finding a bottom anytime soon. We may continue to see more inside day trading on light volume as we approach Friday's USDA report.
Tuesdays trading range was very wide with the high at 75.33 and the low at 70.86 which was near 10 month contract lows. We will have to break out of this range before we can establish any new direction and that could take a while.
Cotton has made it through the initial planting period, but the crop is late and we will have to monitor weather in July and August.
The widespread sell off this week in commodities indicates that the commodity market had reached overbought levels and we will have to wait and see where the bottom will hold in the short term. Momentum in cotton as well as other commodity sectors feels negative for the short term.
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