Looking For Weakness

Rydex traders took their net long position to a new record yesterday just as we are entering a seasonally soft three day period. For some reason the last three days of March have shown consistent weakness, which on average have been down 1.1% since 1990. I suspect that we will see additional attempts to the downside this week given the backdrop of extreme bullishness and poor seasonality. It is also possible we see a quarter end rebalancing of portfolios. Given the big move higher in stocks and the move lower in bonds, this would mean rebalancers would have to sell stocks to buy bonds.

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