The new year has gotten off to a good start so far. Stocks are up across the board and everything in the corporate bond arena is up strong as investors start leaving Treasuries to find fill their risk appetites.
Our equity risk index is up due to this strength as stocks have been leading the overall bond market the last few weeks. Another factor that is likely helping this market out is yearly rebalancing of institutional and retail funds.
While this is probably just a bear market rally it likely has a ways to run. Most bear market rallies stall after they have moved about 20% but we are far more oversold than normal and with it being a new year a lot of the sidelined cash is likely to be put to work. Of course as always you should be using strict risk management rules on every trade and on your portfolio.
The Macro Trader
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