TS Karen sort of fizzled, but the cold front that collided with warm, moist Gulf air dumped a pretty good rain over the mid South during the weekend. The north Delta got 1” to 2”, while the south Delta got 1” to 4”. Greenville up to Cleveland (our area) got the most rain at the 4” level. We drove through the central MS Delta on Sat/Sun, and found all of the cotton open, or harvested. Standing water was seen in many fields Sunday, but the cotton stood up very well and we saw no “string-outs” from cotton being too wet to stay in the boll. Indian rain amounts recently were 5” to as much as 19” and damages there were held to a minimum. If weather is good, farmers will be back in the field Thur.
Our bias has been, and is, negative. That said, we did not understand the rally from 84c to 88c, nor did we see a plunge of 3c today. It was difficult to understand why cotton had put any premium to a weak tropical storm, so we assume when this storm dissipated, the bulls pulled out. Why we didn’t sell into this mini-move on Friday can be chalked up to fear and frustration. The Red Dec is also surprisingly weak today, but the bigger surprise was why it was able to muster a 5c rally in the first place. This week Wed is last day for the Oct, and Fri is report day, but this will be eased into next week. That makes things more interesting with option exp on the following Fri. Sell rallies, if you can recognize them. We have had some trouble with that.
Back months of May, July and Red Dec left breakdown gaps, but lead Dec and Mar did not. The back months thus have an easy target to sell into with the visible gaps on the chart. Dec can be sold on a bounce to 8550, which is a double low on intra-day chart. Mar intra-day lows are at 8533 and 8555. Support for Dec is at 8300, which is a trend line from lows of Nov 12 and Sep 13.