Technically, we are starting to create a flag pattern with this sideways consolidation, but there is no reason to believe the downside testing is over. We still have the sell signal from the crossing moving averages and cotton broke the long term trend line in K'08. Cotton offers have switched to N'08 and the large index funds will start rolling next week.
We could continue to trade sideways short term, but based on the growing cert stocks and neutral grain prices, we don't feel there is a lot of upside potential and K'08 may run out of support after options expire.
marketing@alchempro.com
