Month end trade provides active day in cotton market
29 Sep '07
2 min read
The quarter and month end trading provided a very active day in the cotton market as well as the grains. The pre-open resembled a typical day this week with the market trading above yesterdays close but below 67.00 that was broken yesterday. The opening had Dec's wanted which was consistent with the sentiment that the market would most likely test the highs set from yesterday @ 67.40.
As the market pushed slowly higher, the usual bearish trade options started to enter the market and eventually the locals decided to sell which provided the weakness down to the support line at 65.15 which had held up all week. However, the specs did not buy and instead we hit the sell stops which lead to a sharp fall in the market all the way to 64.30.
Volume was strong with 34,000 in futures and 20,000 options as the market action was mostly related to profit taking. The grains were also mixed as an ending stocks report was friendly for wheat but bearish for soybeans and corn which also lead to the weakness in cotton.
There is a feel that the specs might have signaled that they are now moving into profit taking mode which may allow the market to drift lower to put on new longs at more attractive levels later in the 4th quarter.
Technically, the market finally reacted to the overbought signals based on the 3rd quarter profit taking that entered the market. The heavy support at 65.00 was broken as well as the 9-day moving average. We also broke the bottom line of the upside trend channel that has been in place since this rally started 10 weeks ago.
-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)")
