Larry Connors Daily Battle Plan: Will the Stock/Commodity Correlation Survive the Next Big Pullback?
Good Morning.
The market had its first monthly decline in eight months, but the Daily Battle Plan Model Portfolio was profitable again in May.
The past four days represented the month-end buying phenomena we know of and the averages are a bit skewed, not fully reflecting some of the internal loses the market took.
Most commodity and energy-related stocks got hit hard with many down between 5-15% for the month. Commodity prices have led the market higher so if they continue to move lower, the market is either going to move with it, or this somewhat, out-of-the-ordinary correlation is going to disappear. Either way, over 90% of the world indices are trading above their 200-day moving averages heading into June and, until proven otherwise, the longer term trend remains higher and we’ll continue to trade it that way.
Today the world markets are extremely overbought with the 2-period RSI of our Country Fund ETF Universe showing a reading above 95. As we’ve seen in the past, such readings are often followed by a market pullback within a few days.
The above is from Larry Connors’ Daily Battle Plan. To learn more about the Daily Battle Plan – including access to Larry’s daily ETF trading signals, click here for more information.
Larry Connors is founder and CEO of TradingMarkets.com.