Softs: Cotton fell Tuesday on bearish outside markets. Very little as far as fundamental market moving news was available to move this market, but march cotton was down 219 points at 46.81 cents a pound. This took out Friday's lows and probably hit some stops that pushed us lower. If we see a negative attitude on Wednesday that would push us to test last weeks lows at 45.58, then we will need to pay attention to the technicals this week because we are getting close to breaking the short-term uptrend that we have been in since November 20th. If we see a few closes below 45.58, this would change the trend and could retest the lows of 39.23. We are still looking at the long side of market until this trend is broken.
Cotton Technical Commentary: Taking out Fridays lows could project us to test last weeks lows at 45.58. The 50-day moving average comes in at 45.43 and could be a target under last weeks support.
Energies: March Crude Oil closed $1.73 lower on the session Tuesday at $40.84. Demand concerns continue to weigh heavily as stocks of crude are at all time highs in Cushing, OK. Hundreds of U.S. companies will report fourth quarter numbers this week, which could add to fears that the global recession is getting worse by the week. What is frustrating to consumers is the fact that gasoline is up at the pump an average of 17 cents from a month ago, while crude is over $3 a barrel cheaper.
Technical Commentary: Technically, the market is still in a long-term downtrend and rallies are to be sold. With that in mind, if the March contract is above $40 by month's end, the downtrend will be broken. Nearby support in the March contract will be psychological support at $40 with Tuesday's low of $39.11 and the contract low of $38 as further support. Nearby resistance is $42.45 with $44.50, $47.20 and $50 as further levels of resistance. An inverse head and shoulder bottom is still possible on the March chart, but we need a move through $55 for it to confirm. It projects to $72. A move below $38 will nullify the possibility.
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