An inside day for cotton
Is it time to get long Dec?
Following yesterday’s (Monday’s) dramatic price drop and partial recovery, cotton traded inside that range on Tuesday. The trip down has brought key support into play, which has thus far held, but needs to prove itself by withstanding additional assaults. Yet, while I feel that additional tests of support are to be expected, regular readers should be aware that I have been waiting faithfully for a significant price drop to provide what I consider to be a superior long term buying opportunity in a market that looks fundamentally headed higher. Hey, I’ve never been smart enough to buy precisely at the bottom (and even if I was, I sure wouldn’t know it), so scaling into long positions in July and December on weakness for me makes sense.
Yes, cotton also still seems to want to mirror the grains, so any sharp moves there will impact cotton values and cause additional specs to flee longs. The recent highs made in grains have been phenomenal and profit taking from longs in those markets should become more regular. If a sharp price break were to take place cotton too would experience a further down move, so leave yourself able to add additional longs if such situations develop, but start going long July and especially December.
Sell stops will likely be building below Monday’s lows and experience suggests that prices will revisit those lows.
Spec/Hedge numbers showed specs long 24.5% which is little changed.
March delivery is just around the corner and FND is now 7 trading days away.
I suggested selling July 66 puts yesterday, I still like that idea. I also favor buying December calls outright and long call spreads, the choice depends upon your risk tolerance. If you’d like to discuss strategies, call me.
Si quiere más información, por favor contáctenos,
Maria Aranda
El equipo de Brokers de Futuros USA
Email: [email protected]
TEL: 312-261-7395
Fuente: MF Global
©2007 Jurgens Bauer & Associates all rights reserved.
Jurgens Bauer
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