Rolling With The $
The $ is teasing, testing, pushing and poking to turn up from a 2 month sideways chop. Day highs at 9095, 9094, and today at 9088 represent a clear turn if the Buckeroo can climb above what is now a triple high and stiff near term resistance. The stock market and copper, two leading markets, have shied away from bull trends and are now threatening to break down. Quick 3 day rebounds in the Chicago markets have that "is that all there is" look.
Classings have slowed down, indicating yet another slight adjustment downward for the crop. Texas cannot catch a break. Nothing in the 10 day forecast for the Llano Estacado.
Another good week of sales, in a long line of them? Futures averaged nearly 82c in a short week, so it will be interesting to see if that price deterred any buyers.
Inverse correlation between the $ and cotton has always been good, or very good. As of today one cannot say the $ has definitely made a turn, and is past its decline of 15% since mid Mar. When and if the $ does rise above its 6 week high at 9095 then one can conclude the bear is dead, and a new bull is rising. As for cotton, if the balance sheet is true, Mar at 82c is about 4c above "fair value," and the high tick in Mar at 8306 was only 1c to 2c shy of what our calculated theoretical high is, in the 8350/8500 area.
Cotton got near very minor support at 8060 and rebounded. Next support is 8025, then 7985. Strong support is at 7865, lowest level since 1/05. Regards the $ chart below, The $ has dropped into a price zone between 9100 and 8815 where 2 major lows, and 3 major highs have occurred. The low so far is 8917, which is below 2 of the major events, at one of them, and above the other two. Our bias on the daily chart is that the $ has bottomed, but the weekly chart indicates a new low is possible, but very close to the low of 8917.