US equity markets, stocks, and other assets reversed course on Monday. The rebound places price action back above the long term 200 daily moving average. Our thoughts and game plan are outlined herein.
SPY Daily – Rebound
Momentum illustrated with MACD is beginning to turn. RSI is oversold and improving. That said we don’t expect a “V” shaped recovery at this point. We are looking for consolidation above the 200d, then a gradual climb, if at all, back to resistance levels outlined above.
The Fibonacci retracements (blue shading) between 50% and 61.8% are anticipated as resistance levels. The pivot low at 320.72, near the 9/21d moving averages, will most likely find some sellers looking to exit as well. We will watch for rejection and reassess the need for hedges at these overhead resistance levels.
Futures are just below closing highs, trading in a tight range. Yields are higher, with the 10-year Treasury yield clawing back almost 5% in early trading (1.13%).
SPY Weekly USD/JPY
Watching the USD/JPY forex pair. Higher would be bullish for equities.
If the markets falter at some point this week, we’d consider SPXU, SQQQ, and SDOW for starters. These hedges cushioned the drawdown last week and actually made some nice gains (+44% avg) double the drawdown.
We already have a balanced portfolio with exposure to bonds and fixed assets (46% weighting). Gold is also a consideration, as it takes back some of its lost gains from Friday’s unwinding.
Here are the top 5 from the watchlist. We are looking for follow-through if the markets can hold these levels.
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*** Stocks highlighted are for information purposes only and should not be considered as advice to purchase or to sell mentioned securities.
As always, the use of technical and fundamental analysis is encouraged in order to fine-tune entry and exit points to average seasonal trends.
These mentions are stocks that we may or may not decide to trade as outlined in the watchlist. Always use a stop.