Commodity chart of the day
In the last 6 weeks the Dow Jones has lost roughly 5.5%, completing a 50% Fibonacci retracement within the last few sessions. I had previously advised investors with hefty exposure to securities to lighten up and hopefully some of you headed my advice. I believe the current correction has run its course and I am looking for a bounce from here. No, not the start to another bull market but rather a trade back near levels seen in early October ... trade accordingly.
If you notice in the chart above selling has been rejected 2 out of the last 3 sessions. While I think we could see an appreciation of 3-5% in the coming weeks as opposed to buying stocks I prefer selling Treasuries with clients. I think we should see the inverse happen to Treasuries and as stocks go higher if my assessment is correct Treasuries should move lower. Those not willing to take either of those trade recs could consider scaling back into equity positions as their favorite stocks may be on sale after the most recent deprecation. A move back to 13,250 in the Dow in my estimation should get December 30-year bonds closer to 148'00 and 10-year notes under 133'00.
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