Equity markets are weak again this morning, while bonds and fixed assets are showing signs of a rebound. S&P futures are lower in the pre-market session. Hedges TZA, SPXU, SDOW, SQQQ and puts are gaining momentum in response to that weakness. Our plan is to add to these hedges and increase our bond exposure in the short-term if this persists.
Bonds are Rebounding
A review of investment grade bonds yielded a bullish reversal in LQD. In addition, TIP and SCHZ showed similar bullish tendencies.
Long-term bearish trend patterns are beginning to reverse. As a result, we’ll consider starting and/or adding these assets as long as the equity market shows weakness. We’ll wait until after the opening range (9:30 – 10:00 AM).
Yields are lower. Click to enlarge charts.
LQD – click to enlarge
TIP – click to enlarge
SCHZ – click to enlarge
In his book “Technical Analysis – Power Tools for Active Investors”, author and trader Gerald Appel outlined how he used the short-term MACD 5,9 for entries, default 9,26 for trending and 19,39 for major trend shifts.
The lower panel features this long-term signal.
Seasonality and the Long-Term Trend
The longer-term trend is intact, so it is important to note that April is seasonally one of the strongest months of the year. in the weekend video.