Wednesday, January 27, 2010

Market Update: Stocks and Futures

The stock market saw its first big drop in months, with stocks dropping about -5.5% from their recent peak. We avoided part of the early decline in stocks, but our stock market models went long as "some of the air was let out of the recent balloon." Both Long-term and Intermediate-Term (overbought/oversold) models are currently long.

Futures Markets
After a nice run early in January for our futures portfolio, the dollar's recent strength and weakness in commodities caused whipsaw losses. As a result, we currently have small positions in the currency markets. We are still long several commodities markets, including metals and energy -- as well as several softs.

Traders need to monitor these positions because a deeper decline means positions should be closed out. Traders have to manage that risk...

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