Home > Commodities and Rates, Short-Term Trader > Cotton No 2: The Bonanza Might Be Coming To An End

Cotton No 2: The Bonanza Might Be Coming To An End

November 10, 2010 Leave a comment Go to comments

Yesterday, we saw a huge reversal on big volume in precious metals after the CME raised margin requirements on the Silver (SI) contract. Today, we saw another gigantic reversal, this time in Cotton, parallel to the move made in the Silver market. This type of price action after such a parabolic run is indicative of a trend change at hand. Last week, when I first mentioned a trade was brewing in Cotton it was trading nearly 20% lower. There were no reasons at that time to get in the way of the freight train, however, in light of today's reversal I think risk now favors the bears. This trade, like the one in Silver, is not for the 'faint of heart', and needs to be managed diligently. I could see a 15-20% correction occurring in rather short-order. There is the distinct possibility of an assault on today's high, but should be short-lived and ultimately unsustainable.

 

Cotton

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