December Drops Below Uptrend Line

As of 10 a.m. this morning, the December '08 contract on the New York Cotton Exchange was at 75.15, down 62 points following a sell-off on Monday that broke below the latest uptrend line. It appears that support is just under 75.00.

An upside gap developed between Friday's lows and Monday's highs. If you buy the market theory that prices always move up or down to fill gaps, then a price of 76.75 will have to be reached to do it.

Assuming a basis of 350 points, December needs to move to 83.50 for growers to book new-crop cotton for 80 cents, which, right now, is the psychological magic number.