Finally New All-Time Highs! What's next? Real position in Cotton.

Finally New All-Time Highs! What's next? Real position in Cotton.


Following last week's analysis, I have a short position in Cotton. The reasons for this are explained in “Is this time different for S&P500 and the upcoming FED meeting? Cotton, AUD and more”. My stop is above the last top. First soft target around 63.00.

Cotton analysis 11/03/2019

Many entry signals occurred this week. Most important were the Spearhead pattern and the break above the previous top (10/14/2019, 65.85). The market reached to 65.99 on Wednesday then collapsed, taking out many lows on its way down. 

Now, since Thursday's bar was quite large, we can expect a few more small range days. The best-case scenario is to not see a break above Friday's high. An inside bar on Monday (orange bar) will create a base for further decline.

I'll be looking for short signals in British Pound and 30YR T-Bonds. There are setups but no clear signals for now.


Finally, the market broke to a new all-time high. And now it looks like it will stay there. 

I have already closed my long position in the S&P500 futures. I wish I haven't done so but two targets hit and new high ahead of the FED meeting I expected the market to hold around the new highs. 

OK, what's next?

We've witnessed the third rate cut in this rate cycle. According to Strategas Asset Management, this is the sweet spot for the stock market. Since 1982, have produced higher-than-average returns when the Fed has finished its easing cycle at the third rate cut.

S&P500 performance after three rate cuts

Now FED signalled a pause in the cycle so we can expect the market to continue to grow.

My recession indicator dropped this week and now is showing 30% probability of having a recession in the next 6 months.

I believe this bull market will continue and I'll be looking to take buy signals.

Now, let's find your missing piece!

Vassil Banov,
Founder of Piece of Trading

Trades mentioned here are either taken or will be taken by the author if the right conditions appear. They are NOT recommendations nor any of this constitute investment advice. Please read the Risk Disclaimer

Charts made with TradeStation®.

TAGS: S&P500, All-Time-High, Cotton, Spy, Federal Reserve, Bonds, British Pound

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