Fairly Sideways-Trade Thought

Dow: +91.87…
Nasdaq: +25.79… S&P: +10.07…


Dow: +91.87…
Nasdaq: +25.79… S&P: +10.07…

I’m moving on from all the yield curve yaketty yak until such time as we start losing 200 S&P points. The market doesn’t seem to be too concerned with the topic right now because bids have been holding water pretty well again since last Friday.

Since we had that big knee jerk down last Friday, the market hasn’t been lighting anything on fire, but it has managed to churn sideways. You can make the case that the indexes are in minor bear flags technically, but I am seeing a good amount of individual stocks and sector etf’s that are trying really hard to work off last Friday’s selloff.

Things can turn on a dime with the market, but I think we would have seen some serious downside follow through on Monday if the concern, for now, was that great.  The first quarter ends tomorrow and I think folks are looking forward to putting it in the books. It was a great recovery after the drubbing the market took in the fourth quarter. Time flies.

A lot has changed over the last six months. We had a hot economy slow down, we saw rates that were ripping higher start to reverse and go lower. Fears of three rate increases may turn into decreases.

As the fundamentals change, so will asset allocations at some point. This could result in sector rotations.  Will tech get sold to buy gold?  Will the dollar continue higher? Will oil reverse here at the $60 level or is it heading to $70?  Is biotech tired?  I always wonder if the market is getting ready to crap out here and go down and test the December lows before we get one more major blast to new highs.

Here’s food for thought on a contrarian pair trade idea for you……..

Bonds could be extended here, meaning if bonds get sold, yield goes back up (doesn’t have to be for too long).  Utilities (beneficiary of lower rates) look toppy and tired to me.  Will get hurt with higher rates.

So if you are a contrarian, you could short XLU and buy TBT (long yield). I’m thinking about this one.

Just a thought.

As always there is a lot to chew on.



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