Another wild ride again today as the markets trade on the defensive as the stock market falls again on economic credit concerns. The FED did make an announcement yesterday that they would try and prop up the financial industry by pumping more funding into the economy with injections up to 90 billion USD!
This is the biggest injection of funds into the market since after the 9/11 crisis. The rest of the markets seem to be paralyzed as they are uncertain how to react to mixed S&D reports that were released by the USDA today. Volume was good with over 28,000 futures and 26,000 options.
Changes for the August report were very light in the U.S. as well as around the world. See a break down of the S&D report in attached PDF. The largest change coming from a .5 million bale increase in the Indian crop while the U.S. cut production .15 million bales to 17.35 which was below expectations.
However, the overall increase in world ending stocks of .7 million bales gave the final numbers a bearish tone. This was also influenced by the weak stock market and losses in grains, energy and metals. As the day progressed and the stock market started to fight back from the lows, the cotton market did make a big push to unchanged as well, but eventually gave these gains back to close down on the day.
Technically, the market closed below the 50 day moving average and does not look strong on any chart, but we have come off 400 pts in the last 3 days and are probably due for a small bounce. This will depend on a stabilizing in the markets which looks possible with the stock market working back to roughly unchanged by the end to the day.
However, in order to hold these levels short term, we will need to see good volume of new sales and business to avoid further weakness nearby. Overall, the tone in the markets is downward and we have not see a real strong bottom to signal a rebound is nearby.
marketing@alchempro.com
