Cotton was down again today sharply before the opening bell, but found strong support at yesterday's low of 65.15. Cotton bounced off the lows and gradually worked higher until the market found good selling at yesterday's high as well at 66.50.
We are building a new range where the cotton market is trading sideways and will have to wait until we get more information in order to determine which way it will break out. If the trend continues, then it will be to the upside as volume remains strong with 25,000 futures and 27,000 options.
Spec hedge position grew over 3% to 27% long today as the open interest goes higher and the specs added long contracts and reduced shorts last week. The sales and exports will continue to struggle this week, but there is much more activity buying new crop cotton as we are hearing of large volumes being contracted in Uzbekistan for December delivery.
This is fueling the trade scale up selling as hedging is being done on the new crop purchases. As the crop gets closer, we should continue to see this selling pressure over the market and will have to wait and see how much the specs are willing to endure. Grains are struggling to rally and the stock market looks very uncertain at the moment as energy and metals fell lower today.
Technically, it is interesting to see the identical range and candlestick pattern the last two days. It was an inside trading day which was unable to break either end of the range, but the bottom end of the range is getting close to breaking the 9-day moving average below. Existing home sales and the carryover effect its having on consumer spending has kept the stock market from rallying for the last 3 trading sessions.
The break in gold and oil today, was also a bearish indicator short term for the equity markets and this could start to spill over into other markets.
-Ltd..jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Thermore (Far East) Ltd.")
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Telangana State Industrial Infrastructure Corporation Limited (TSllC Ltd)")
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Taiwan Textile Federation (TTF)")
