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Stock market in holiday mood on Nov 26

27
Nov '08

Market was in holiday mood today with light volume and high volatility. Cotton took advantage of the low liquidity and headed near limit up as we finish rolling the Z'08 forward. There are roughly 500 contracts left open and those should get settled out today. We are now looking at the demand going forward and this has slowed down quite a bit after the jump in NY.

The stock market is still positive and commodity prices remain firm even though the dollar managed to make an oversold bounce today as well. Volume was light as we head into the long weekend even though we are open for a shorter session on Friday.

The real uncertainty at the moment is whether the stock market is experiencing another dead cat bounce where it eventually gives back everything and the dollar heads back to the highs or we are entering a long term upside to the equity markets which will support the foreign markets and their currencies which is bearish the dollar and positive for commodities.

Oil and energy are making a slow but steady climb higher, metals remain at the top of the 6 week range. Grains and softs are also climbing higher. We really need to make it through next week without any real big losses in equity markets and we could be looking at a much healthier long term correction for the overdone CRB.

Technically we are starting to move sideways with support under 40 cents. The firm stock market is a big help in seeing higher cotton prices if it can hold next week.

The dollar could not get through the resistance at 88.50 and this was supportive for commodity prices as it is still having trouble finding a bottom. The new administration is naming people who will be the new players in the financial crisis going forward and this may help the short term outlook and keep the stocks moving higher.

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