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.

Sara Eisen

Sara Eisen joined CNBC in December 2013 as a correspondent, focusing on the global consumer. She is co-anchor of the 10AM ET hour of CNBC's "Squawk on the Street" (M-F, 9AM-11AM ET), broadcast from Post 9 at the New York Stock Exchange.

In March 2018, Eisen was named co-anchor of CNBC's "Power Lunch" (M-F, 1PM-3PM ET), which broadcasts from CNBC Global Headquarters in Englewood Cliffs, N.J.

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