Profit taking mode

Since the better than expected NFP risk assets have been in profit taking mode on the second leg org the risky asset rally since late April. Actually Eur/USDA and Gold began the process a few days earlier. The chart below shows the current gains since late April with oil being the clear winner so far.

The next chart shows how much we so far have retraced since highs last week.

Eur/usd and gold are sitting at 38.2 fib level, but equities and oil so far have hold on better to the gains.

The main question is if this is just a correction or the beginning of some selling going into the summer as a consequence of "green shoots" being priced in and the strong raise in bond yields beginning to make its effect. I was calling for a equity correction in May and a rebound in June before Summer vacation, but the correction newer went as a far as I expected. On the other hand the performance of risky assets in June after the "fireworks" on June 1 have also be disappointing. All in all, I think this is a correction before we take the last move up in risky asset before Summer. But I most also admit that we now have the final condition for the spring rally to fail ... as I am now expecting this last move up ... so be very carefull out there. As always the market have its own ways and remember, that July will be an important month to watch for the any change in underlying factors impacting financial markets in the autumn