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April 23, 2025
Counter Intuitive?
With all the trade war talk?
BUY COTTON?
YES, THAT IS WHAT YOU DO HERE…
As
I pointed out several weeks ago, Cotton showed itself to be astoundingly strong
as the stock market was crashing during Trump’s “Liberation” week…And in fact ,
with the Dow closing down 2230 points on Friday, April 4th, the
Cotton market actually put in a massive “key reversal” on the biggest one day
volume in the history of Cotton trading…and followed that by putting in
consecutive higher weekly closes in both weeks since…AND TODAY TRADED UP INTO NEW TWO MONTH HIGHS.
As I titled my April 10th newsletter, “Let the
market tell you,” and what the Cotton market is
telling you right now…in the midst of all the bearish news that’s out there…is
“GET LONG.” I mean, really, if Cotton can rally 7 cents in the face of the
fastest stock market downturn since the Depression, it IS a
undeniable sign of bullish strength…and DOES argue that one of Cotton’s NORMAL
20-30 cent (and more) rallies is just getting underway.
In that same newsletter, https://crokerrhyne.com/newsletters/04-10-25.htm
, I posted data of every July Cotton contract going back to 1980 showing
that this contract typically moves BIG between February and expiration,
with only 2 out of those 45 contracts having less than a 10 cent range…and the
average range for all of those 45 years being 21.5 cents…and that average being
almost 29 cents during the past 5 years. The point is: COTTON TYPICALLY MOVES BIG BETWEEN NOW AND
JULY…year after year after year. Check out the link if you want
to see the numbers.
And most importantly, in that newsletter, I also noted that COMMERCIAL TRADERS
(BIG MERCHANTS) HAVE THE LARGEST NET LONG POSITION IN HISTORY, WHILE
SPECULATIVE FUNDS HAVE AN OPPOSING LARGEST NET SHORT POSITION IN HISTORY…The
significance of this IS that those Commercials are Long because they have taken
orders, based on today’s prices, to deliver Cotton to end users, both
domestically and abroad, at specified dates in the future…And to protect
themselves against prices having risen by the time they go into the cash market
to buy those actual bales, THEY BUY FUTURES CONTRACTS NOW…AND THE SIMPLE FACT THAT THEY NOW
HAVE THEIR BIGGEST LONG POSITION IN HISTORY “TELLS ME” THAT THEY ARE LIKELY
GOING TO BE NEEDING A LOT OF COTTON BETWEEN NOW AND JULY.
On the other hand, all those Funds are short because they
think there’s money to be made on the downside…and they DON’T have the Cotton
to deliver if they need to…and the only way they get out of those RECORD SHORTS is to BUY BACK ALL THOSE FUTURES
CONTRACTS as/if Cotton gets going on the upside…which is exactly what we
are JUST beginning to see.
I THINK JULY COTTON WILL
TAKE OUT ITS 87.72 HIGH BEFORE IT GOES OFF THE BOARD. BUY THIS MARKET NOW.
Today’s action, NEW TWO MONTH
HIGHS, on zero news, DOES STAND OUT…and certainly indicative of SOMETHING going
on behind the scenes…Believe me, the big players are NOT going to telegraph
what they are doing…
I truly think this looks explosive…and JUST getting
started…So if you want it, I believe you load up here…NOT after it has rallied
another 7-8 cents and some bullish news gets revealed…
Contact me if you want to do something with it…
Thanks,
Bill
770-425-7241
866-578-1001
All
option prices in this newsletter include all fees and commissions. All charts,
unless otherwise noted, are by Aspen Graphics and CRB.
FUTURES
TRADING IS NOT FOR EVERYONE. THE RISK OF LOSS IN TRADING CAN BE SUBSTANTIAL.
THEREFORE, CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT
OF YOUR FINANCIAL CONDITION. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE
RESULTS. THERE IS NO GUARANTEE YOUR TRADING EXPERIENCE WILL BE SIMILAR TO PAST
PERFORMANCE.
The author of this piece currently trades for his own
account and has a financial interest in the following derivative products
mentioned within: Cotton