Commodity Chart Of The Day
(click image to enlarge)
In the chart above, you can see the up-sloping trend line that has supported for the last four months. We've experienced a steady grind higher, with the S&P appreciating by nearly 17%. It appears prices are starting to consolidate and form an interim top, as seen from the chart action. Failure to make new highs, breaching their MAs, and a doji star on Friday -- a correction may be in the first inning.
I've advised clients with large stock positions to lighten up on the way up, or to establish hedges to protect from a correction moving forward. A settlement under the up-sloping trend line would be confirmation of more selling to follow, in my opinion. At a minimum in the coming weeks, I suspect we will see a 38.2% Fibonacci retracement, which would represent a 4.6% loss. If third quarter earnings disappoint, or more bad news comes out of Europe, or global economies continue to slow, do not rule out a trade 8-10% lower. I suspect there will be some sort of government intervention to prevent a major meltdown ahead of the election, but I would continue to be very defensive in the coming weeks.
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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.