Biggest Sell-Off of the Year

On June 21, 2013 by TradingDesk

The FED Chairman’s discussion of the potential end to Quantitative Easing, and another contraction in Chinese manufacturing data were the 1-2 punch that created the biggest sell-off of the year for most global equity and commodity markets yesterday. Most major stock indices finished the day down 2-5%, while commodity losses ranged from 3-7%, with metals taking the largest hit. While yesterday’s drop was severe, 2013 has actually had the lowest average volatility in the past 5 years as the chart below shows. The question now that the FED is signaling an end to its money printing is if the wild swings of the past few years will return, or could prices and price swings actually drop if commodities return to trading based on fundamental supply & demand rather than financial supply & demand.

That question may take years to answer, and in the mean-time, energy prices are right back into the middle of their 9+ week trading range, with a neutral technical outlook. $2.70 remains the key pivot point to the downside for both RBOB and ULSD futures, with a strong ceiling set in the high $2.90s.

CLICK HERE for a PDF of today’s charts

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