Cotton Update & General Commentary

May 20th, 2009 Posted in Uncategorized

December '09 Cotton (CTZ9) is hovering around where the 200 day MA and the 20 day EMA have converged. This area is roughly 58.90 to 59.20. CTZ9 broke down to 59.12 in the session today, but was able to firm up and close up toward the high end of the range.  The waffling equity markets did not help the rally in CTZ9 as much as the better grain/oilseed and worsening dollar did. So the scenario posed a couple/few blogs ago to buy the dip is working for now.

I do like the trade. I do not like the thinness in the deferred contracts. We'll take this in degrees and look for the following targets to measure strength: 61.07, 61.70, and then new swing highs. Beyond that please refer to the previous blog. The stop should be tightened per your risk tolerance.

Cattle futures are an options-sellers dream come true. A well established range for quite some time. I really don't see too much that will knock the market out of the range near-term, save for a runaway grain market.

Today the soybean market posted a decent correction in the old-crop / new-crop spread of SN9 vs. SX9. That spread today made a high of 168.6, but went out the low of 154.4. Perhaps it will actually see a greater correction back down towards the mid 130's.

A market that is now on my radar is Copper. Fundamentally heavily reliant on continued demand from China for any continued upmove, it has a pretty-looking triangle formation. You can draw your lines where you wish, but take a look:

In my opinion, markets tend to break out of such formations in the direction of the prevailing trend. Up, in this case. Yet I have seen the opposite occur, also. I'm going to do a little more research on this market, such as looking for seasonal tendencies and correlations. I'll get back to you when I formulate a strategy.

Contact me with any questions/comments ... Bob  1.312.987.2053 // 1.80.388.0998