Feb. 9, 2005 - 11:00 PM (written last night)
I have done this for 25 years. I have "seen" countless market bottoms, and missed countless market bottoms. In this business of trading the future, one is always learning. One is always remembering and comparing today with years past. Some things are always different. Some are always the same. Cotton? At 42 cents? I have, I believe, is the same as many of those potential bottoms I have "seen" before.
Since I first recommended buying Cotton on January 31st, I have been communicating with numerous people involved in the Cotton business. It struck me tonight (I have to say it, while deep in thought taking the garbage down to the street) that, here we are at these fairly historic lows, and, as I recalled comments to me late this afternoon by a Cotton ginner in Texas---that "everybody he talked to was pretty pessimistic", I realized something I have realized on various occasions in the past.....
There is a time in this business when a significant opportunity is at hand, but all of those traders who follow a particular market are so beaten down, and so exhausted from looking for "the turn", and so out of money from having done so, that the market and the traders in it become "silent". Any real expectations of a bull move are nowhere to be found and it's not even that everybody has become bearish. It just that everybody has become numb and muted and they sure as hell don't want to put any more money on the table.....EXACTLY when that is what they should be doing.
In all these years of selling my opinion, even though I have precipitated my share of financial disasters, I have also, on numerous occasions, been dead on the money....With my generally fearless nature when it comes to disagreeing with popular opinion, I have experienced what it is like to buy a market when nobody else wants to, and then be right....which brings me to the point of this whole thought, to what I remembered/realized as I gazed up at Orion while coming back up the driveway, and I phrase it here in precisely the same words as they came to me:
"Every body is pessimistic. NOBODY is aggressive. NOW is the time to be aggressive."
As I keep repeating, I believe buying Cotton NOW is about as good a bet as your ever get in this business. It's low, and basically in the same place it was August (sideways markets just wear commodity traders out). The world is not in the sort of economic condition that should lead to severely depressed commodity prices...and I just cannot see cotton, which I consider to be a crossover between the agricultural and industrial sectors, staying at these levels for long at all. If you have looked through the chart histories provided in my last three newsletters, you will have noted that Cotton is something of a "V" market, meaning its reversals of trend can be quite sudden and being 5-6 cents away from its lows in a matter of weeks is not uncommon....
If you any interest at all in ever doing anything in the futures markets, you really should take an immediate look at this...As always, I strongly recommend doing this through the purchase of options as your risk is then limited to whatever you have spent on the idea.
Give me a call.....I may be dead wrong but I think this thing is ready to go....
Thanks...charts follow reflecting this morning's open.
For more information on this idea, and historical research on Cotton for the past 30 years, go to Newsletter Archives & Chart Studies and select any dates with Cotton as the subject.