IBB and TBT turned weaker - 20Y Treasuries bounced - yesterday.
As a conclusion of the daily comment of today, I wrote:
I do not know exactly what will happen today, but I am positioned for expectations of "not higher rates" down the road. All my current positions are in the Red, but I feel that the portfolio is balanced:
- ]if the Fed sends a soft message, my long Treasuries and materials should do fine, while the short XLF should underperform - but still bleed. However, the short IBB could be in trouble.
- If the Fed sends hawkish signals, then Treasuries/materials will be under pressure, the IBB short position should do fine, while the short XLF should underperform a weaker market - but still be green.
I might add that in terms of risks, the portfolio is also somewhat balanced.
The trade ideas for today are below. You will note that the long ideas shown in Yellow are all very oversold stocks that could easily bounce hard today.
The two short ideas - ADL and ALGT- shown in Yellow are very different. They show similar TA patterns, but the major difference is in their volume.
We can see below that DAL is well traded, while ALGT is almost not known. It is very difficult trading a stock that carries such low volume, not only because of the spread, but also because of the violent moves that any dedicated fund can generate.
We can also see that the DAL price/Volume structure makes it easier to trade short as there is a sea of sellers while support is almost gone. On the other hand, ALGT still have some support, which will slow down any possible down move. This is the reason why the selling curve at the left side of the Supply Figure is not steep.