In a recent blog post, I indicated the overbought condition of the market. I have also said that markets can remain over-bought for a long time. A catalyst is needed to trigger a correction. We got that catalyst yesterday when the Federal Reserve suggested that they may taper off their bond buying program (Qualitative Easing) as early as next month. This was a real surprise for the market.
Market Snapshot Transition
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| The sell off is accelerating. |
Chart View
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| After reaching new all time high on Wednesday the market suffered a major reversal on the Fed comments |
The bond market has been trending down since July of last year. Yesterday it actually dropped more than stocks.
20 Year + US Treasury Bond Chart
QE has been the impetus for the market rise in the face of a less than desirable global economic backdrop. Now that there is uncertainty about the future of QE it is prudent to raise a little cash now and let the market settle out for a while.
This blog post does not constitute an offer of investment advice. This blog is only provided for educational purposes. Please read the Important Blog Disclosure posted in the right channel bar.
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