Cotton bounced off the lowest levels since mid-October to close above 69.25 and give us the second green bar in 13 sessions. Technically, the market is still bearish but oversold signals like the RSI have reached 38 so we are trying to build a bottom. The USD struggled and commodities and equities enjoyed a rare up day. Volume remains above average as we actually had a revision of the spec hedge report showing an 8.5% long position compared to the 12.8 previously reported.
It is obvious that index and spec funds have been liquidating long positions so this makes sense that the number is lower than last week. Commercials have been scale down buyers and finding good demand on this correction. Options expire on Friday so expect to see more sideways to unchanged trading until next week. Finally, notice the USD chart on page 3. We cannot rule out further weakness in the commodity complex until this uptrend channel in the dollar is broken.