Stocks started out on their way to another good day but about 10:30 this morning something happened as stocks, treasury bonds, oil and gold dropped sharply and the dollar soared. Stocks and commodities could not do as they have been doing and recover to new highs in the PM.
Ben Bernanke was testifying at the time and it may be that people felt that he dismissed another round of quantitative easing for which some had built up hope. In the past, QE has been a big boost to the risk trades and taking QE off the table is a downer for some big market participants. If gold drops in the next few daqys like it did today, down 4.5%, I will be a buyer. Oil would also interest me with a decent drop in price.
While treasury bonds were down, corporate bonds finished about flat. Overseas, Asia was up but of course they finish trading before western markets even open. Europe was down as was most of Latin America, Brazil and Chile excluded.
It is about time for profit-taking from this very nice beginning of the year rally. I am hoping for a small pullback of about 4% – 5% in stocks and 10% in gold.