• Most ETFs, after looking very bearish just last week, have bounced or rallied quite substantially
  • SPY, QQQ, XLI, XLY look primed for further gains
  • Although IWM is underperforming and looks to be stuck trading sideways for now

• Fixed Income ETFs remain very weak
  • Corporate bonds, LQD and HYG, still face the possibility of a fall to test 2020’s COVID lows 
  • The large sell off in EM sovereign bonds (EMB) has finally begun
  • TLT is selling off again as UST yields rise

• Energy stocks (XLE) are back to rallying as WTI is back above $100 and moving on $110 
  • Another test of its quadruple top looks likely

• Wildcards:
  • Caution is warranted as long as small caps continue to under perform. In a bull market, they should be leading, not lagging rallies
  • The US yield curve has gotten even flatter even as the Fed amps up its hawkish rhetoric

Trading Ideas – Performance

Trading Ideas – Commentary

• Volatility in the markets has led us to exit/stopped us out of some positions
  • IWM stopped out for a gain of 1.43%
  • XLY stopped out for a gain of 9.26%
  • XLI stopped out for a loss of -3.45%
  • XLF stopped out for a loss of -6.27%
  • XLP stopped out for a loss of -3.14%
  • Exited TLT for a gain of 1.72%, as the market focused on the “safe haven” bids narrative at the start of the Russian invasion at the end of Feb
  • Exited XLE for a gain of 16.64% after oil’s sharp move higher and immediate reversal on 7 March

• Letting winners run:
  • Remained short LQD, HYG, and EMB to maintain exposure to the “rising rates” narrative
    • Cost push inflation is still high, and will likely be driven higher by the Russian invasion of Ukraine
    • Also, fixed income charts are very bearish, especially EMB
    • Volatility, uncertainty and general bearishness due to the invasion are weighing heavily on EM debt

Trading Ideas – Short

• LQD, HYG, EMB
  • LQD and HYG look poised for a large move lower, possibly all the way to COVID 2020’s lows
  • EMB is now in the midst of the large drop it has been threatening since mid Jan 

• IWM has begun to trade sideways but is underperforming the SPY and QQQ
  • If US equities turn down again small caps will probably lead the way lower
  • Wait for the market to signal which direction it wants to move in as IWM is currently trading in a range between $191-$208.5

• EEM has now broken below its well established bearish channel, and is looking very weak

• EZU and FXI are also good short candidates, as their charts still look bearish
  • FXI is trickier to trade now as the Chinese government has verbally intervened to halt the selloff in Chinese stocks