The cotton market was sharply lower Thursday as the Dow is close to giving back its entire one-day historic rally. Wednesday saw the Dow rally well over 1000 points, however, at the time or writing this, the Dow is off 625 points. The break in the Dow is also pushing crude oil lower, a key ingredient of synthetics. Speculative selling in cotton has intensified of late as the most recent government data still shows that community remains net long the ICE futures.

It may be necessary to convert those bullish longs into bearish shorts before the market can see a sustained upside rally. Of course holiday volume is an impediment to any sort of balance in the market. That is, low volume often leads to exaggerated moves.

On Friday, USDA will issue its latest round of sales and exports data. It will be interesting to see if last week’s 6.00 cent crash in cotton prices generated any extra sales.

Technically, the cotton market is oversold (that’s an understatement) and its 100-day trend is bearish. By all measures, most chart indicators are “flashing sell” which is all the encouragement speculators.

March cotton settled at 72.01 cents, down 1.49 cents, July finished at 74.25 cents, down 1.53 cents, December cotton was 73.03 cents, down 0.77 cent. Thursday’s estimated volume was 27,100.