Lift That Bale? The Game May Have Shifted This Morning Before Our Very Eyes
Wednesday, April 22, 2009 | William Kurtz Is this Spam?The price of July Cotton has enjoyed a remarkable run, from a low of 42.22 cents per pound on March 9, 2009 until the high so far today at 51.89. This represents more than a 78.6% retracement of Cotton’s previous decline, which began on January 28. That percentage is one of the Fibonacci levels which often mark the end of a correction. We consider that a retracement of more than that percentage is a warning signal that we may not have been dealing with a correction, after all, but a move within the major trend instead.
So, it’s “make or break time” for Cotton. If it should break above 53.10, its previous High, then all bets are off for a “correction,” and prices may sail on higher. July Cotton must not break above that High for our current outlook to remain valid – i.e., that the advance since March 9 has been a “correction.”
Apart from the Fibonacci analysis, our Indicators have been calling for a topping and downside reversal too, although not as vigorously as we would like.
It is totally engrossing to watch the “minutes” charts of Cotton in streaming data this morning. Prices have been fluctuating around 51.60. The ten-minute chart shows a Candlestick bearish “Shooting Star” pattern at eleven o’clock. Prices have fallen since then.
Now, the 11:30 ten-minute bar shows a tall black candle and a closing price at 50.90 for that time period. Our Indicators for the ten-minute chart have rolled over.
I think the odds are that the fever has broken. I could be fooled. Prices could fly up past today’s (so far) High and make mincemeat of this analysis. Fingers crossed.
I’d prefer that prices don’t fly up. I suggested to my people last night that they buy a Cotton Put upon the opening of the market this morning, you see.
This is one of those days when technical analysis sings.
William Kurtz April 22, 2009 12:30 PM EDT http://www.candelaabra.com
