Cotton Futures: Decoding the Matrix of Market ForcesCotton, a seemingly unassuming commodity, is quietly aligning for a significant bullish move. But remember—this is not a prompt for reckless action. The entry is reserved for those who wait for the Daily timeframe to confirm the trend change.
The Codes of the Cotton Conspiracy
Code #1: The Commercial COT Index
Commercials are not merely dabbling—they are at an extreme in positioning, maxed out over a 26-week lookback. Their hands are heavy with longs, signaling a brewing storm that only the wise will prepare for.
Code #2: All-Time Extreme Positioning
For the first time since 2019, commercials hold their maximum long positions. Unlike 2019, these positions are at higher prices, implying deeper convictions. Meanwhile, Large Speculators are excessively short—a telltale sign that the tide may soon turn. Both are at an all-time extreme in positioning.
Code #3: Valuation Metrics
Cotton stands undervalued against the pillars of Gold, DXY, and Treasuries. The market’s mispricing is your opportunity, should you dare to seize it.
Code #4: Open Interest Analysis
Open Interest (OI) has been climbing steadily, a silent crescendo. Who is fueling this growth? The commercials—those orchestrators of market moves—are discreetly accumulating, signaling an impending bullish wave.
Code #5: ADX Over 60—The Endgame Approaches
The ADX has breached the critical threshold of 60, a harbinger of trend exhaustion. Confirmation lies in the ADX’s roll-over or the Large Speculators’ retreat from their short positions.
Code #6: Spread Divergence
As prices sink to new lows, the spread between the front and next month contracts defiantly rises—commercials are eager for the front month, a potent sign when paired with extreme positioning.
Bonus Codes: Hidden Layers of Accumulation
Insider Acc Index and ProGo hint at quiet accumulation. Momentum shows bullish divergence, %R enters a buy zone, and the oversold stochastic adds another layer of intrigue.
The Flaws in the System
Yet, no system is without its anomalies. Small Speculators are excessively long—a peculiar deviation, given their knack for misjudging bottoms. This anomaly presents two scenarios: a merciless long squeeze forcing out the naive, or a rare stroke of luck for the masses. Moreover, while True Seasonal is misaligned, remember that seasonals reflect historical ghosts, while positioning unveils the machinations of today's masters. Always lean towards positioning as your guide, not seasonals.
The Red Pill Awaits
The stage is set. The players are in position. The market whispers secrets only a few are willing to hear. Cotton’s matrix is laid bare—whether you act or remain a spectator is the choice only you can make.
But beware, the rabbit hole goes deeper than you think. Are you ready to follow?
Choose wisely.
