Thursday, May 11, 2006

Healthly sell-off?

Unless you were long a select list of sectors (mainly energy and commodities), it was an ugly day out there. Dow finished down 142 or roughly 1.2%. Nasdaq ended worse, down 48 or just over 2%. Concerns over inflation were once again in focus for traders. Precious metals, including gold, silver and copper continued to climb to new highs (did you notice coppers intraday high to over $4 a pound?).

So the question of the day - was this a healthy sell-off, a shaking out the weak hands, before another move to the upside? Or is this the beginning of a longer down trend? Unfortunately, I tend to believe we are in the latter. Traders are unsure about future Fed moves, and as long as energy and commodity prices remain at elevated levels, worries about inflation will continue to persist.

Have a great night.


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