Our market is no longer the giant raw material that drove the world economy from 1800 past WWI, so when some big players want to come and go quickly, they can make a mess out of things. So rather than a hurricane to drive prices on a furious 10c rollercoaster, we get the big money players. For the sake of the farmers and merchants and mills, we hope this craziness has subsided. What once took 3 months is now only a 2 day move. Enough.
Sales were surprisingly good at 92 kb (Turkey bot 19 kb), with futures prices that week averaging about 91.50c. If mills were willing to buy almost 100kb at those prices, you would think they will really grab cotton with prices under 85c. Fear and a hope that prices will go down further may keep them hesitant. A month ago the talk was that there were some “size” orders with Dec based around 8300. Looks like we’ll get to check out how strong those buy orders are.
If you were lucky enough to sell and hold a short position through the 94c spike, we advise easing out. The market is right back within its previous 82c to 89c range, and may stay there. Not much has changed, other than now this market has put the fear of Zeus into both bulls and bears. One thing is for sure, and that is that all traders are wide awake and likely to be holding smaller positions. Until mid Oct, the market can still do some goofy things, but at some point we believe the bear spreads will give up. We put on some bear Mar/Julys in the +340 area, and are exiting in the +50 to +70 area. It was previously thought we may have these spreads on past New Year. Still longer term negative, but near term fearful.
Volume on Wed spiked high enough to consider that the market was near a low. High volume days, or a series of days, have identified a major low last May, a major high in Jan, a major low in Nov, and an intermediate high in Oct. The spot chart shows trend line support near 8400. The only other support is the 200 day avg at 8225. The 89 and 144 day avgs coincide at 8550. The most serious resistance lies at the gap from 8810 to 8876. Given a chance, sell into that gap.