• 2 weeks of carnage in global markets have pushed major markets to break below key support levels
  • SPY, QQQ, and IWM are looking very bearish
  • XLRE turned from bullish to bearish in a little over 2 weeks
  • IWM’s underperformance vs the major US indices, and XLP’s outperformance vs XLY, has proved to be prescient in signaling the lack of conviction in the broader Mid-March to April rally

• Energy stocks (XLE) are still elevated, but with macro conditions deteriorating all over the world, how long can demand for oil remain at current levels?

• Fixed Income ETFs have returned to selling off 
  • LQD and EMB look intent on testing their COVID lows
  • HYG still has a ways to fall, and key support to break through, before testing its COVID lows
  • TLT is testing critical support, as US long yields continue to move higher in 2022

Trading Ideas – Performance

Trading Ideas – Commentary

• Looking to enter short positions in IWM, EMB, and possibly EEM on pullbacks

• Re-established shorts in LQD and HYG on breakouts of their previous lows

• Volatility in the markets has led us to exit/stopped us out of:
  • 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 (end of Feb)
  • Exited XLE for a gain of 16.64% after oil’s sharp move higher and immediate reversal on 8 March
  • Exited LQD for a gain of 5.56%, HYG for a gain of 4.16%, and EMB for a gain of 6.29%

Trading Ideas – Long

• XLP again provides us with an interesting bet
  • Defensiveness against selloffs in major indices and general market volatility
  • Upside potential from its bullish trend
  • As before, can pair an XLP long with a short in XLY; especially now that IWM has broken out to the downside, confirming broad market bearishness (be mindful of the beta mismatch and the ways in which it can work for and against you)

Trading Ideas – Short

• IWM has broken out to the downside and is a fair distance away from the next major support level at $151.5 

• LQD, HYG, EMB
  • LQD, HYG, and EMB again look poised for a large move lower, possibly all the way to COVID 2020’s lows

• EEM recently broke below its well established bearish channel, and is looking very weak even with its bounce

• 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