Are Markets Done Correcting? Bloomberg Intelligence Weighs In
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(Kitco News) - Markets have had a tendency to mean revert if valuations are overstretched beyond their historical averages, and equities markets may be following this pattern, said Mike McGlone, senior commodity strategist of Bloomberg Intelligence, who noted that a breakout is imminent.
“Typically, those kinds of means are visited, particularly when you get that stretch just above them, so that’s obviously technical. The fundamentals are oftentimes when markets get that stretch they just need a spark, and I think we’re getting the spark,” McGlone told Kitco News.
On gold, fundamentals point to brighter days ahead for gold prices, according to McGlone.
The key factor to watch for is the dollar, he said.
“The key thing I’m watching for is the trade-weighted broad dollar’s peak near its 16-year high, and last year we had the VIX volatility index on an annualized basis bottom,” McGlone said.