Submitted by: Francis Soyer
Yesterday the day after the Federal Reserve gave the market a peanut butter and jelly sandwich when it was hoping for a steak continued its violent sell off. The Federal reserve in addition gave a pessimistic assessment of the US economy on a forward looking basis.
Commodities were sold with vigor. Algorithm selling by hedge funds and banks alike led to falls in precious metals and basically all commodities with funds scrambling to cut losses and using those sales to cover margin requirements and fly to safety in cash.
Expect a near term bounce in metals as shorts cover into the weekend and bargain hunters emerge, specifically China as they step in a buy with both hands. Note this is one of only 4 opportunities to buy at or below VWAP prices (volume weighted average price.) Gold on the other hand has been harder over the past year with virtually no opportunities to buy at or better than VWAP.
