RISK OFF JANUARY

January was disappointing for investors after the great Xmas rally, nobody expected this kind of falling markets.

• DJIA -5,3%
• SP500-3,6%

This was a sobering month. There is a concern about tapering that FED won’t rescue the market again. Most of investors turned into risk off mood and left the market and covered their losing positions in January. This drop means whole year decline? We cannot be sure about that but not a good signal for the whole year. The first month direction is clear – bullish.

There were plenty of concerns in January about the FED tapering, emerging market risks, disappointing American company results and the some emerging market currency issues. But in my view those were not the real effects behind the sell-off. The only reason was that, the markets are rallied too much in last year and Mr. Market needs some refreshments. So the two digit correction easily could come. No worries. 

In technical view the 15.750 support level is lost at DJIA so down way now is pretty opened. The area is opened for further sell off and investors could stay in risk off mood.

The BFM Assets Team.