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Volumes pick up in cotton markets
14
Aug '08
Volume keeps picking up as other commodities bounced back and cotton followed. We are starting to test the top of the range as the stock market is moving south and we are riding the momentum from the tight USDA report which came out yesterday. We could get a nice export report tomorrow and make a run at the 72.00 level. Futures were over 20,000 today and options volume was 16,000 as open interest keeps falling.

Demand has slowed down, but the commodity market is showing oversold signals and is due for a correction. This slide started at the end of June and looks like it is finally coming to an end as the dollar struggles to go higher this week.

Grains all closed limit up and they will play a big role in pushing cotton above resistance levels starting at 72.00. We still have some concern about the Northern hem crop and this will keep the down side firm in the short term at 69.00 as we will get scale up selling above 72.00. Looks like we are building a sideways trade channel in the short term.

Technicals continue to look negative but we continue to trade inside the intraday trading range on Monday between 69/72 cents. The market bottomed out early in the day but closed near the highs and we are seeing good support near 69 cents and sellers near 72.

We could get a few more bounces on the over sold technicals down the road, but based on the performance of the dollar recently, this correction in commodities feels like it may have started a long term move downward. However, there is still quite a bit of time in Dec so expect some more sideways trading.

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