It appears that there has been a shift in hedge fund strategy in regards to risk trades since the beginning of this week.
I have been watching the CCI and it is moving down rather sharply and is now threatening to take out a chart support level should it continue to move lower tomorrow.
I cannot as of yet ascertain what the thinking is behind the abandonment of some of these risk trades but whatever the reason, it has resulted in a loss of money flows into the broad commodity markets for the time being.
There has been some chatter over nervousness concerning possible reprisals by terrorist groups as a result of the death of OBL. Crude oil in particular has been roiled by this since Sunday evening with crude traders unsure what to do next. That has led to wild swings in price in that market but I have noticed broad based selling across several of the commodity markets irrespective of fundamentals. The selling is of a nature which tells me that it is algorithm related because it is mindless and indiscriminate.
Bonds continue going straight up which is evidence that they are getting some sort of safe haven bid as well which helps confirm in my mind that this is related to risk aversion.
I am not sure when the money flows will reverse but when they do, the commodities will begin moving higher based off the weakness in the US Dollar, which is hovering above chart support and attempting to stop from dropping like a rock.
"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat
Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput
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