Market was trading higher electronically as it continued to feed off of the bounce from the 700 point correction last week. The market tried to fill the gap set last Friday and did make the gap smaller, but was unable to close it having to reach 64.30.
Wheat had a very strong day spending most of the day near a limit up move as soybeans and corn were also positive. Overall, it was a heavier day volume wise with 15,000 futures and 16,000 options. Funds were also good pre-opening buyers as their long position only changed slightly.
Going from 32.8 to 31.2% after a 40% correction from the lows shows how much volatility this market has at the moment and how we are trading a new era of cotton since ICE took over in February. This electronic platform has introduced new players and increased the liquidity for cotton which is allowing it to participate on a new level.
We are expecting a better export sales report on Thursday, but overall the market looks like it is trying to find a new range as we bounced hard when V'07 dipped below 60 cents on Friday and we just need to establish the new upper resistance level.
Technically the Dec'07 is looking much healthier with RSI back under 50 and there seems to be some nervous bulls who may continue to take some profits on rallies. However, there will be scale down support under the market starting at 63.45 down to 62.90 which is a new gap.
Wheat remained strong today as the grains continue to add support for cotton and the fight for next season's acreage. The top of the gap at 64.30 from Friday remains a key short term top until it is broken and then we will find more scale up selling at 65.00.
marketing@alchempro.com
