Tuesday, July 28, 2009

Midday Briefing: A Shift Away From Risk

After failing to take out yesterday's high (and the overnight high), note that the S&P 500 e-mini (ES) futures have taken out yesterday's low and are trading in the lower portion of the multi-day trading range referenced earlier. The move lower in stocks is supported by a general unwinding of the recent risk trade, so we're seeing lower yields in the 10-year Treasury note, lower gold and oil prices, and a stronger U.S. dollar vs. the euro. I expect to see us challenge the 7/24 lows before this correction is over; failure to breach or stay below that level would have strong bullish implications.