• Markets are starting to move in a differentiated manner again, but will this last? 
  • QQQ is still looking very bearish, even as SPY and IWM take a breather
  • XLI and XLF still look weak
  • XLP and XLY are now both very bearish, as inflation begins to bite into retailers’ margins

• 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?

• Fixed Income ETFs still look very bearish 
  • LQD and EMB look intent on testing their COVID lows
  • HYG is likely to break below key support and test its COVID lows
  • TLT is testing critical support, amidst high volatility in US rates 

Trading Ideas – Performance

Trading Ideas – Commentary

• Entered a straddle on XLU at a strike of $72, expiry Sep ‘22
  • Position will be profitable if XLU breaks out of its current 3 week old range

• XLP’s trend turned bearish very quickly last week, and it is no longer a good hedge against a short XLY position
  • An outright short against XLP and/or XLY would likely be more profitable

• 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:
  • Stopped out – IWM 1.43%, XLY 9.26%
  • Stopped out – XLI -3.45%, XLF -6.27%, XLP -3.14%
  • Exited – LQD 5.56%, HYG 4.16%, EMB 6.29%
  • 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

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 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