NEW YORK (TheStreet) - Markets fell Thursday, as many analysts believe equities have reached a near-term peak.
Bonds, equities and precious metals were bid higher throughout October as investors believed the Federal Reserve would keep bond purchases intact.
The Fed did say on Wednesday that it will keep its policy in place, but it still ignited a sharp selloff as its comments were more hawkish than investors had expected. The Fed, however, made little to no reference to slowing down its bond purchases soon.
Equity indexes have been strong since the government shutdown ended; nonetheless, the move to record highs has come alongside a move to less risky stocks not as sensitive to general economic conditions. High-beta momentum stocks such as Netflix (NFLX) and Tesla Motors (TSLA) have dropped as investors have preferred the more defensive consumer-staple sector.Meanwhile, financial stocks such as JPMorgan Chase (JPM), picture below, have remained weak. Although JPMorgan has its own massive legal issues, the bank's weakness is no less bearish for the broader market. The stock made a large head-and-shoulders pattern on its hourly chart throughout October. (TLT). Many investors believed that bonds would rally if the Fed kept stimulus in place. The Fed kept its policy intact, but bond prices still fell. The selloff has caused many to turn bearish on the long bond, although that may be premature. On the chart below, the Fibonacci indicator is placed over price action. The indicator highlights potential points of retracement based on the previous move from base to peak. The pullback to the 38.2% level signals a bullish continuation is still possible. Follow @AndrewSachais This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
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