S&P 500 IndexLong
Bear rally still on the card.
After closing below 3600 on 30 Sep 2022, S&P fought back with a vengeance. The future price is now currently trading above 3700.
This rally may have been triggered by a fall in treasury yield and the US Dollar.
The US 10-Year Yield peaked at 4.02% and has so far lost 40 bps
The US dollar Index (DXY), peaked at 114.77 and is currently trading at 111.55
This was quite similar to the July 2022 rally where both the 10Year Yield and the USD decline significantly.
If the yield and dollar continue to decline and if S&P brokes above 3750, we may see a retest to 3800 - 3900.
While we are still bearish overall, we have warned that bear rallies can be brutal.
We have personally taken profits on the majority of our shorts.
While we are still holding some shorts, our overall portfolio is positioned towards neutral with several long positions (Spread Trades).
During this period you should have a few goals and plans.
1) If you have loaded up your entire portfolio with shorts only last week. It's chasing. You're probably a little late. Most of our shorts were taken in late August/early September. Consider derisking by removing some of your short position.
2) Load up on short-term longs to take advantage of this rally. We did this in the previous week with call options on Marathon Digital. Since the rally is led by a weaker dollar and lower yield, counters like Coinbase/Marathon Digital should see a temporary rally. Gold or anything commodity-related may run up as well
3)At the end of the day, this is still a bear market rally, you can sit out and wait for higher shorts.
We are also facing this typical market rally before CPI data which can be dangerous. Last month's CPI print should be still in everyone's mind.
This rally may have been triggered by a fall in treasury yield and the US Dollar.
The US 10-Year Yield peaked at 4.02% and has so far lost 40 bps
The US dollar Index (DXY), peaked at 114.77 and is currently trading at 111.55
This was quite similar to the July 2022 rally where both the 10Year Yield and the USD decline significantly.
If the yield and dollar continue to decline and if S&P brokes above 3750, we may see a retest to 3800 - 3900.
While we are still bearish overall, we have warned that bear rallies can be brutal.
We have personally taken profits on the majority of our shorts.
While we are still holding some shorts, our overall portfolio is positioned towards neutral with several long positions (Spread Trades).
During this period you should have a few goals and plans.
1) If you have loaded up your entire portfolio with shorts only last week. It's chasing. You're probably a little late. Most of our shorts were taken in late August/early September. Consider derisking by removing some of your short position.
2) Load up on short-term longs to take advantage of this rally. We did this in the previous week with call options on Marathon Digital. Since the rally is led by a weaker dollar and lower yield, counters like Coinbase/Marathon Digital should see a temporary rally. Gold or anything commodity-related may run up as well
3)At the end of the day, this is still a bear market rally, you can sit out and wait for higher shorts.
We are also facing this typical market rally before CPI data which can be dangerous. Last month's CPI print should be still in everyone's mind.
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