February 4, 2021
Still Buying Cotton
Still looking for $1.00-$1.10
All of you Cotton guys must KNOW that virtually every Cotton top you've ever seen was accompanied by everybody SCREAMING, "Buy!" And you must be aware, as we are AGAIN making new highs, that this is NOT the case now…which continues to KEEP ME BULLISH. If you are inclined to agree with me…If my perspective has been, and is, making sense to you, please give me a call and get an account opened. I don’t write this newsletter to hear myself talk. This is my primary communication and sales tool…and I STICK MY OPINION OUT THERE IN HOPES THAT IF PEOPLE THINK MY WORK IS WORTHY, THEY WILL PICK UP THE PHONE AND CALL ME.
I CONTINUE TO THINK COTTON IS BEGINNING THE NEXT STAGE OF ITS BULL MARKET…and that it is a perfect example directly related to two of the seven trading “rules” I have written to myself…and have on the wall in front of me.
One – THE BEST WAY IS GOING WITH IT No, this is not, “The trend is your friend.” Close, but not the idea…It’s simply that the one thing you are trying to do in this stuff is be positioned in the direction a market is moving…That trying to call a turn in a market (which I do get involved with) is much more difficult than just “letting the market tell you” which way it’s heading…and Go WITH it.
Two – THERE IS NOTHING THAT MATTERS MORE THAN THE CHART. ANYTHING YOU HEAR, OR READ, OR FEEL IS IRRELEVANT TO WHAT THE CHART “SAYS”, AND GENERALLY, THE DIRECTION IT IS POINTING. That should be pretty clear…and is certainly something of a variation of number one…But what it addresses is that traders often have a fear, i.e. FEELING, of “If I buy it here, I might be buying the very top of the market,” instead of just saying, “This LOOKS like it’s going higher. I am going with it,” and understanding that the RISK here is NO different that if this market was 10 cents lower, and maybe your perception was that, “I am buying a pullback,” and therefore thinking that the risk is less. But it’s NOT…The point is, I don’t care what your PERCEPTION might be as to what stage a market is in, any trade you put on basically has the same risk of being wrong…whether you think you are buying a bottom, or a pullback…OR A MARKET THAT APPEARS TO BE ON ITS WAY HIGHER.
And put that together with what I consider to be the highest percentage situation you ever find in the markets…A market that has been sideways for a LONG time…and either pushes into new highs (or lows)…with the odds in my opinion then being high that a big move WILL follow…IN the direction of the “break out.” For sure, there is NO guarantee that this WILL be the case…Markets do “break out” and then totally reverse…But my experience is that, especially following a VERY long consolidation, that the next move WILL be in the direction that it is “pointing.”
And aside from my ongoing conviction that the USA and World Economies are in the initial stages of exploding out of the Covid Contraction, all of the above argues, in my mind, for owning, and buying, this market. Here and Now.
Call me if you want to talk about possibilities here…whether it’s Old or New Crop.
All option prices in this newsletter include all fees and commissions. All charts, unless otherwise noted, are by Aspen Graphics and CRB.
The author of this piece currently trades for his own account and has a financial interest in the following derivative products mentioned within: Cotton