• 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