80-Cent Cotton a Breath Away

Today (Tuesday, January 29) at 11 a.m., the December contract on the New York Cotton Exchange is at 76.90, up 30 points.

The last two weeks have been a rollercoaster ride. And that would be putting it mildly. There were two limit up days, and a limit down day.

For three consecutive days, the market moved above 80 cents, and closed above 80 twice. Sometimes it’s amazing how trading signals turn out to be trading rules. The rule of thumb to confirm a sustainable price rally is that the market has to break through major resistance - at 80 cents, in this case - and close above it three consecutive days.

Well, closing twice above 80 cents sort of proved that rule, and the next thing you know, December had broken below 75 cents. Dr. O. A. Cleveland called that a "market correction."

For now, the market appears to be out of breath.