This move suggests that ‘there’s probably going to be a correction’: Strategist

Commodities like oil and copper are down in the past month, and that could be a warning sign for equities going forward.

The prices of crude and copper having "stalled" recently suggests that at a "very minimum, you're going to have some sort of correction," Boris Schlossberg, managing director of foreign exchange strategy at BK Asset Management, said Tuesday on CNBC's "Trading Nation."

Oil has plummeted more than 10 percent in the last month, while copper futures are down 2 percent. Still, both commodities are well above some of the lows seen in 2016.

"We've had a massive move in equities over the last couple of months without any type of a correction. And the stall in commodities suggests to me that there's probably going to be a correction in equities. It's not necessarily the end of the bull market, but a 5, 10 percent move to the downside, which is being presaged by the fact that all of these commodities are really not moving up, is a very, very interesting possibility," Schlossberg said Tuesday in an interview on CNBC's "Trading Nation."

Oil prices rebounded on Tuesday and Wednesday after logging four negative sessions in five. The broader market, too, has bounced back from its move lower on Monday.

Elements like a better-than-expected consumer confidence figure and comments from Federal Reserve Vice Chairman Stanley Fischer have had an impact, wrote Miller Tabak equity strategist Matt Maley in a Wednesday morning note. But a reversal in crude "from very-short-term oversold conditions played a role as well."

Should the bounce in crude continue, the stock market rally "could get some legs," but given what Maley calls recent "technical damage" in the oil market, "it's far from a lock that these bounces will last."

Oil and copper were both in the green in Wednesday trading.


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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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