Thought Of The Day
“When in doubt, take a nap.” Dagwood
Another huge macro negative for all markets, is the Sanders phenomenon. This raging socialist has gathered up a plurality of delegates, and if he is seen as winning “Super Tuesday,” then the stock market is likely to swoon again. Sanders is bosom buddies with Chavez, Corbyn, and Castro, and has created a Pied Piper momentum with the young and the foolish and the low information voters.
Whatever acreage number one had in a spreadsheet a month ago will need to be recalculated, and it will be lower. Our rough guess is that by the end of Feb, farmers had committed on about 80% of plantings, but that remaining 20% can lose a lot of cotton acres. And its not due to just the price drop, its mostly due to cotton going south more than corn and soy.
Its nearly impossible to focus on such cotton matters as acres and sales, when its noisy outside in politics and Corona. There is a USDA supply/demand report in a week, but who cares when Bernie or Corona can overwhelm all the numbers? The Fed cut rates today by 1/2%, and market reaction was disappointment. Most financial traders wanted a full 1%, and there has been a confidence among them that the Fed really does have that stock market Put. For trading purposes, place sell stops on any long positions, and don’t worry about a push or a small loss. We think cotton is under-priced in the low 60s, but if the stock market dives again, forget it.
TechnicalsWe want to believe cotton completed an a-b-c correction on Fri, but can’t rule out another burst below 60. Unfortunately, our market is hog-tied to the SP for the moment, and fear rules over logic. May reached nearly a 50% retrace from the 2/19 high, and an exact 38% retrace from the Jan high. That suffices for a 4 wave, if that is what the market is making now. Stop out of longs at 6270 and/or 6220.