The cotton market is being restored by falling prices.
If that sounds unreasonable, or inappropriate I beg to differ. You see, while some of my recent comments may have been construed as being full of doom and gloom to you, it was obvious that something was indeed wrong and that the market for cotton futures had gone awry. What was needed is what we have been receiving, a large, healthy dose of medicine; a price correction. In my eyes, the fact that cotton prices have fallen sharply since last Wednesday is healthy news for the cotton market.
Believe it or not falling prices are actually laudable for markets when they have conveyed the message that they have gotten out of order. The ultimate discipline “price action,” (or perhaps a reprisal of “price discovery),” signals the return of the forces of supply and demand. Hopefully this brings reality back into focus. Remember, when the tulips start being valued at too high a level and passion and sensation rule rather than common sense and commercial business acumen, a dose of reality is needed. Price movement can sometimes accomplish that return to reality in swift order.
The sooner prices fall, the better. And as painful as it might seem, the same scenario of “falling prices” could help other markets, like the housing market. When prices get out of whack, the longer the adjustment takes, the longer that market will not be able to fuel movement in the cash markets, which by the way are supposed to be the driving force behind futures.
Anyway, my confidence that cotton futures will enable clients an opportunity to hedge and offset price risk is returning, but we are not out of the woods yet. Speculation is a key element that helps the market function. But just like too much of a good thing can also be bad for you, (chocolate cake for example) can make you sick, and you might have a bad tummy ache for a while to boot. And lastly, after eating so much cake and getting sick, you also may not have the same fondness for chocolate cake…
I can only hope that you will see fit to visit my website jurgensbauer.com and subscribe. While the website still seems to be having some problems, I’m being assured that they will be fixed soon. Until they are, I will continue to email my comments to my long time readers free of charge. If you can help me spread the word about my website I’d appreciate it. Thank you, Jurgens
And in closing, what do Elliot Spitzer and the cotton market have in common?
Answer: After a meteoric rise they both crash and burn!
Si quiere más información, por favor contáctenos,
El equipo de Brokers de Futuros USA
Fuente: MF Global
©2007 Jurgens Bauer & Associates all rights reserved.
La operación de futuros y opciones involucra riesgos de pérdida sustanciales, por lo que no es conveniente para todos los inversionistas. La información y opiniones contenidas en esta publicación, no constituyen, ni deben ser interpretadas para constituir una oferta de venta o la solicitud de compra de algún producto. La información objetiva incluida en este reporte ha sido obtenida de fuentes consideradas como confiables, aunque no esta garantizada en cuanto a su exactitud, ni tampoco en lo que respecta a su completo significado. No se asume responsabilidad con relación a ninguna declaración, así como en lo concerniente a cualquier opinión expresada aquí incluida. La confiabilidad relativa a la información en este reporte es solamente bajo riesgo del lector. Todos los comentarios están basados en opiniones.