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November 1, 2005
Buy Cotton
Cotton is the sort of trade I would make if I were headed off for a year
in South America again, where you just buy all the call options you can
afford, hit the road and forget about it for six months.
I look at this market, trading in the low 50's, and
"envision" it at least 20-25 cents higher by some time next year.
Chartwise, I believe it has spent the last 16 months forming a MAJOR
bottom that, in any given week, should explode out of here and make a
somewhat non-stop move up through its recent highs, then its contract
highs, and then just keep climbing from there...Sentiment and
Fundamental Perceptions in this market have just about reached the "no
hope" category, to the extent I am hearing, "It's GOT
to go down" (to attract any buyers/users)....Although Cotton backed off
roughly four cents in the past few weeks, with all the gloom and doom I
am hearing, you would think it had just PLUNGED into new all time lows,
when in fact it is still exactly in the middle of the range (bottom) it
has been in since August of last year.
Yes, there is a big crop out there, but this is no secret. It's "in the
market", or more specifically, "in" everybody's head, to the extent they
just can't imagine it going up from here, and sure as hell don't want to
bet good money on the idea. The thing is, this is the way it is at EVERY
bottom I have ever seen....In this business, when nobody else wants it,
is when you buy it. This, however, is easy to talk about, but harder to
do when it comes to writing that check......But, every bale out there
WILL get used, and the mountain of cotton that is being harvested will
NOT be a mountain come next July....And I cannot in any way, shape or
form imagine the world's appetite for Cotton diminishing...And, some
time next year, possibly long before July, the price will probably be
a LOT higher....Obviously, this is my opinion, and I may be proven
wrong, but every now and then there is a trade I look at and just
think, "No Brainer!". Again, I may end up looking like an idiot, but I
think this is one of them.
Buy Cotton! I don't care
how you do it. Use the Both Sides Strategy, Just Buy Calls, or Buy
Futures. This market is a BUY.
I should be covering Gold, Copper, Treasury Bonds and Sugar in the next
day or two...
If you want to make this bet (yes, that's what Futures is), Give me a
call!!....While Cotton is here, into the recent 4 cent weakness, not
after it starts running...
Thanks,
Bill Rhyne
770-514-1993
800-578-1001
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