Commodities Outlook: Separate Yourself from the Herd

Matthew Bradbard submits:

Why is it dangerous when most of the marketplace is leaning one way? Well, because most people lose money when they invest, so if you do what most do you will arrive at the same outcome. When the majority thinks the stock market is moving into a new bull market it is probably time for a correction, when most believe the US dollar is doomed it will presumably see higher ground, when the general market sentiment is that fed funds will be near zero indefinitely then we may actually see rates move higher sooner rather than later. The point being is when too many people lean in one direction it is generally a bad outcome. Think of yachtsman all running towards one side of a boat…you get the idea.

Financials

Stocks: Both the S&P and the Dow closed almost at the exact price where the week started, talk about a market that may be running on fumes. Sellers continue to emerge around 1010 to 1015 in the S&P and we will be sellers at those levels with them on behalf of clients. Continue to accumulate puts and hold for a break to 960 is how we see it. 958 serves as the 38.3% Fibonacci retracement, the 50 day moving average comes in at 940 in September. The Dow should find resistance at 9425 and support at 9175 and then 8975. In the words of Warren Buffet we suggest booking profits as “you never go broke by taking a profit.” It may actually help you sleep better as well with less stock market exposure.

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