Thin Holiday Trading; Profit-taking Likely to Pressure Stocks
Despite the higher equity markets overnight, the lack of upside momentum is making traders leery of a possible short-term profit-taking correction ahead of tomorrow’s holiday. Weakness in the Dollar could help to trigger a sell-off.
Treasuries are trading flat to better. March Treasury Bonds and March Treasury Notes are trying to recover after a hard sell-off this week. Selling pressure should resume after the holiday as traders are beginning to price in the possibility of an interest rate hike in 2010. Aggressive buying by Japanese investors helped to drive up yields earlier in the week.
The U.S. Dollar is trading lower overnight under thin, pre-holiday selling pressure. Although it is difficult to gauge the actual reasons behind the weakness, it’s easy to speculate that the huge run-up in the Dollar the past few weeks is making it ripe for profit-taking.
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