Markets Selling Off Sharply

On May 23, 2013 by TradingDesk

Global stock and commodity markets are selling off sharply this morning, led by a 7% drop in the Japanese Nikkei index and a 2% decrease in several European indices, after the FED minutes and Ben Bernanke’s testimony before congress yesterday left many confused about the future course of quantitative easing. China’s PMI reading for may also surprised to the downside, which has added to the negative sentiment. With most of the world’s developed stock markets sitting at 5-year highs, a correction in the 5-10% range is certainly possible, especially if fears of the free-money punchbowl being taken away materialize.

RBOB and ULSD futures are now both trading a dime lower for the week, with a major test of technical support coming up. Both contracts are currently trading below the trend lines that have supported their recovery in May, setting up a potential test of the year’s lows around $2.70 for each. It would be unusual to see a major sell-off ahead of a long weekend, especially Memorial Day which unofficially marks the beginning of driving season, but with investment flows driving prices more than actual driving, it would not be impossible. In fact, yesterday’s DOE report showed a counter-seasonal build in gasoline supplies, leaving stock piles near their highest level for this time of year in nearly 5 years.

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