It's no longer only silver, DBC is down 5% today and 10% in a couple of days. I'm glad I'm not too long long in commodities but they still hurt the PnL...
The week sheds more data. Indeed a bit panicky today as the herd moved to the exits quickly especially in the commodities. Last time this happened equities fell precipitously too. The fly in the ointment is of course that the Fed is a buyer. I would as stated not expect a crash in the equities market but it certainly looks like money flows have changed direction....
Broadening? Are we supposed to be looking at those lines you've drawn from left to right, or right to left. From left to right they appear to be narrowing. Or am I losing my mind? P.S. that was some sell-off in oil today! Whew.
Sucker rally. Most speedy oscillators have flipped. ADX failed. 6th of the month, most insititutional inflows are in and summer doldrums not too far off. End of QE-2 is a toss up. Commodities breaking. 'Bout the only thing remaining is 52 week lows still below 40. The last bastard..........oops, I mean bastion.
How did this strategy perform in 2010 and 2009? The problem with seasonals is you are taking a tiny edge and then ignoring all other factors in favour of it. If the market is displaying buy signals in May, then these SWAMP any seasonal factors. If the market is displaying sell signals in May, then these also swamp seasonal factors. Therefore seasonals are not only utterly useless, but are probably very harmful for your performance, because they might convince you to avoid a hugely profitable trade, or stay in a massive losing trade.
September 2010 was the prime example. Sep was supposed to be the weakest month. Was there any news that lead to Friday selloff? In the morning the market felt quite strong and then boom!
Resource equities are in the middle of a significant "risk off" correction that I believe could continue for 2-3 weeks. I'm thinking Oil will drop another $10-$20 in the near future. These kind of corrective phases tend to be quite quick. Anything that involves risk ( eg small caps, monster P/E companies, high debt companies ) are prone to drop in this kind of phase. China is releasing a lot of news tommorrow, this could effect the speed of this phase. I wouldn't want to be net long on Monday, if there is a sell off coming the surprises are almost always Monday morning gap downs. I think risk adverse investors will have itchy trigger fingers on any weakness this week. Overall market has lots of crosswinds, mainly because the latest earnings were extremely good ( especially technology ). The US jobs report on Friday was very strong. The existance of these crosswinds makes predicting overall market direction a little perilous, but my gut is telling me we will correct down somewhat the next few weeks.