Cotton managed yet another higher close on the return from a 3-day weekend, which is impressive considering the trade side seems to be bailing out. Last FridayΆs CFTC Commitments of Traders report showed the trade were net sellers of about 10,000 contracts. That strongly suggests itΆs largely the speculative side continuing to pump this market higher.Commercials are reporting the rally has muted mill demand.

Which brings me to show you the weekly cotton chart below. ItΆs looking to me like this spec-propelled rally is getting tired; sort of “rolling over” as depicted by my hand-drawn curved lines.

On the other hand, note that in this chart I also show this rally has already exceeded a 62% Fibonacci retracement of the long bear market from those spring/summer/fall highs just under the 94 cent/lb. mark. And that, by Fibonacci theory, means the market may well test those highs before it runs out of buyers altogether. I agree with other analysts who follow cotton closely that a close over 90 will almost surely trigger a bunch of buy stops from traders attempting to “pick the top” as well as new buying from specs who will surely then set their sights on a test of the highs at 94.

At this point then, I see no fault in holding sales at current levels and waiting for 90 in the nearby to advance new crop sales; especially in light of NCC forecasts for U.S. cotton acreage to rise this spring to 11.2 million acres. But donΆt be surprised if such a sale is followed in short order by another sale just under 94. I have very little confidence cotton will take out those highs. IΆm surprised, from a global fundamental perspective, that prices are even this high.