USA : Cotton markets opens higher

Market opened higher after yesterday's firm close and set the high of the day before the open outcry began. After the market opening, we tested the lows early, but settled the day back near the middle of the daily range. Funds and locals drove the market higher and there was light trade scale up in futures and options near the highs.
Volume was above average with 22,000 futures and 28,000 options as the market climbed higher on positive gains in the outside markets. Grains were all higher today as well as the stock market as there was good demand found under the cotton market. Funds and specs continue to push the market higher as the new crop support is carrying the front end higher.
Z'07 fundamentals do not justify the market to be trading near these levels, but the strength in the grain markets are carrying over and the stock market is trying to test the 13.500 level which is a major level of resistance. The week was up strong overall and we will have to see if it can continue next week with some major news and reports being released.
Most importantly is the Fed announcement on lowering the discount rate which comes out on Tuesday. Then we have large bank earnings reports coming out which are anticipated to determine the effects of the subprime credit crisis. We will also have October options expiration which will effect several of the commodity and equity markets.
Technically, RSI is closing in on 70% which would signal an overbought market, but we closed above the 50 day moving average so technically we are still in an uptrend. The cotton market has had several up days in a row as we continue to improve the technical buy picture.
Obviously new crop grains will be critical to the further upside in this move as the funds continue to buy into scale up trade selling. There are still several weeks remaining for the Northern Hem crop which will be very critical, but the short term trend remains friendly.