Beware The Current Market Calm

While the major averages have been treading water for the past week, there’s been a lot of turbulence roiling under the surface. We’ve been noting the recent plummet in metals, and today’s continuation is no exception. Adding to the recent breakdowns in precious metals, base metals finally decided to join them in their misery. Today, both copper (JJC) and nickel (JJN–thinly traded!) broke support levels while gold, silver, and platinum continue to spiral into the depths of despair. Uranium (URA) (which should really be considered an energy play) has been one of the biggest losers with today’s 4.8% drop adding to it’s growing pain. The stock has shed over 30% of its mid-February peak value

Reflecting these losses are the fall in commodity based currencies–the Loonie (FXC) and the Aussie dollar (FXA). Both are sinking below support and their recent downtrends have only been exacerbated by the falloff in energy and metals.

Oil, too, has succumbed to downward pressures. Today, the USO and OIL, both big oil etfs, plunged below support levels. While oil had held steady for a while, it’s downward movement was presaged by the fall in oil explorers (IEO, XOP) and servicers (PXJ, OIH, XES), all of which are off 25-30% since their mid-December highs.

The bearish action in energy and metals has put a damper on the Commodity Index etf, DBC. This tracking stock opened the day below $14.50 support and has shed 2.25% since then. (This is a fairly big drop for this issue.) The stock appears that it could very well re-test major support at $14. Unfortunately, the commodity carnage does not appear to be over yet, folks!

The threat of high interest rates are starting to take their toll on interest rate sensitive issues. REITs and bonds have lately been experiencing outflows, although the market seems to be firming up a bit for them today. However, I wouldn’t hold my breath that this signals the beginning of a major rebound. Best to stay on the sidelines for now.

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