ETF Trading Opportunities: Is The Rally Fizzling?
Click on the slides above and press CTRL+SHIFT+F to view in full screen. If the slides above aren’t loading, you can read ETF Edge over here.
The market has lost a good amount of upside momentum over the past few days.
Is the bounce fading? Or is everyone just taking a collective breath? Either way, watch for breakouts!
- The bounce, bear market rally, or whatever you want to call it, has slowed markedly in recent days, with most markets starting to trade sideways – watch for breakouts!
- SPY and QQQ are both consolidating, as IWM tries to test resistance
- XLRE, XLF, XLY spent the last week trading sideways; even XLP’s heroic rally has stalled
- Energy stocks (XLE) are still making new highs for the year, but with macro conditions deteriorating all over the world, how long can demand for oil remain at current levels?
- XLU moves sideways too, but a move to test its all time highs in April remains possible
- Fixed Income ETFs continue to move together, as their rallies begin to reverse
- LQD, HYG, and EMB are all moving in a bearish direction again
- TLT is trying to find a bottom as it approaches another test of critical support
Trading Ideas – Performance


Trading Ideas – Commentary
- Re-entered short position in EMB as it broke below short term support at 90
- Trade aims to capitalize on EMB’s bearish trend, as well as deteriorating global macro conditions
- Entered a straddle on XLU at a strike of 72, expiry Sep ‘22
- Position will be profitable if XLU makes a decisive move in either direction
- Shorts in LQD and HYG stopped out as both spiked higher over the end of May, for respective returns of 4.93% and 3.33%
- Looking to enter short positions on pullbacks, possibly in:
- IWM
- EEM
Trading Ideas – Long
- A straddle on XLU is an increasingly interesting prospect
- Consolidating between critical support and all time highs, which way will it break?
- Straddles are expensive, but will allow us to profit as long as the market makes a decisive break
- With global macro conditions deteriorating, and energy prices remaining sky high, XLU will have to move in one direction or the other
Trading Ideas – Short
- IWM has broken out to the downside and remains vulnerable to further sell offs even as it bounces, given deteriorating macro conditions
- It is trading a fair distance away from the next major support level at 151.5, but it would be wise to wait for its short and medium term trends to realign
- LQD, HYG, EMB
- LQD, HYG, and EMB can still make a large move lower, possibly all the way to COVID 2020’s lows
- All three have seen their recent rallies go into reverse, are their short term trends realigning with medium term bearishness?
- EEM recently broke below its well established bearish channel, and is looking very weak even as it bounces
- 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 once to halt the selloff in Chinese stocks
Do You Want To Make Money Trading?
Learn how to, and more, in our Trading Courses.
Tags :