Market opened weaker based on initial losses in the stock market and more credit concerns, but quickly reversed on some trade buying which pushed the market higher. Grains and energy also found support and the stock market ended up closing higher on the day.
Volume was average with 26,000 futures and 8,000 options as the market is still trading sideways in a narrow range. We are creating a wedge pattern technically which eventually will break out and allow the market to test the current sideways trading range.
The majority of volume will be starting to pick up next week as hedge funds holding large long positions in Dec'07 will start to roll in volume beginning the 5th business day of the month, Wednesday.
The U.S. dollar set a new low today, but oil set a new high as the market continues its latest speculative cycle until some major news changes the situation. The jobs report was better than expected and the economy seems to be showing no signs of a recession or slow down short term.
Technically, the chart is flagging, but we did break through the recent lows this morning and extended the range near 63 cents. The market however seems to be locked into spreading from Dec to March and will unlikely break out of this narrow trading range until after December expires.
With a record high open interest, it will be interesting to see how far specs are willing to hold their long positions in cotton. The uncertainty in the stock markettoday may show that we are reaching a nearby top, but we still have weakness in the dollar and that will have the most impact on price direction nearby.
marketing@alchempro.com
