Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

When The Trend Is Not Your Friend – A Trading Plan

By Michele SchneiderStock MarketsJun 20, 2022 12:42AM ET
www.investing.com/analysis/when-the-trend-is-not-your-friend-a-trading-plan-200625987
When The Trend Is Not Your Friend – A Trading Plan
By Michele Schneider   |  Jun 20, 2022 12:42AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

SPY-XRT-Daily Chart
SPY-XRT-Daily Chart

Currently, if we look at the S&P 500 and the Retail Sector through the SPDR® S&P Retail ETF (NYSE:XRT), our foregone conclusion is that for the most part, equities are a distraction.

The obvious trend is down, but is it that so obvious at current levels?

Looking at the SPY chart, we could be setting up for a mean reversion trade (bear market bounce that can take SPY back up to 380.) So, selling right now? Maybe, but SPY has to break 360 first.

Granny Retail XRT, also in a downtrend, has some good bottoming action, and is outperforming the SPY.  Plus, the momentum on the Real Motion indicator is holding up.

That makes it fairly simple.

Either XRT holds here and clears back over the 200-week moving average and the 62.50 level to rally more bringing the SPY up along with it….

Or, SPY fails 360 and drags XRT down further with it, causing XRT to potentially break harder below the 200-WMA or close to 50.00.

So if it is that simple, why do we think equities are more of a distraction right now?

IBB-FXI-Daily Chart
IBB-FXI-Daily Chart

Trends are supposed to be your friend. But right now, the trend feels a bit treacherous for both the bears and the bulls.

Biotechnology IBB, the first to bottom in 2009 after the mortgage crisis, has been in a strong downtrend and is well under the 200-WMA. However, IBB is also outperforming the SPY and showing some balance in momentum.

Can it hold up if SPY fails 260? Doubtful.

So, what do we like right now?

China, Commodities and Cannabis.

CRB-MSOS-Daily Chart
CRB-MSOS-Daily Chart

We are all about trading opportunities with the best risk.

China, via iShares China Large-Cap ETF (NYSE:FXI), a position in our portfolio, could be something to add to. As the U.S. does QT, China is doing QE.

Commodities (CRB) have been in an uptrend and are correcting into support. With the worst global inflation rates in 40 years and stagflation on the horizon, we will continue to add to our tactical positions in commodities.

Cannabis, via AdvisorShares Pure US Cannabis ETF (NYSE:MSOS), which we are aside in right now, continues to intrigue us. If equities rise, so will that sector. And if equities fall, the momentum indicates that the selling there has pretty much dried up.

Our portfolio remains in the black and for those individuals underwater, stay tuned for more ways to inflation-proof YOUR portfolio and mitigate inflation. We see attractive sectors and are waiting for the right time to execute. –

ETF Summary

S&P 500 (SPY) 380 resistance 374 pivotal support 360 major support

Russell 2000 (IWM159 support 175-177 big resistance

Dow (DIA) 294 support

NASDAQ (QQQ290 resistance 263 big support

KRE (Regional Banks) 56 the 200 WMA 60 resistance

SMH (Semiconductors) 195 some minor support with 220 resistance

IYT (Transportation) 211.87 the 200-WMA resistance 192 support

IBB (Biotechnology) Still potential double bottom-110 pivotal-112.50 resistance

XRT (Retail) 60.62 the important 200-WMA support closed just below-a gap up Tuesday would look compelling for a rally

When The Trend Is Not Your Friend – A Trading Plan
 

Related Articles

When The Trend Is Not Your Friend – A Trading Plan

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (2)
Jeff Page
Jeff Page Jun 20, 2022 7:55AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Thoughts on Emerging markets & High yield? Considering longer dated puts.Still no GLD? Looking for potential short dated calls on XLV & IBB or turbocharging with CURE. Positive inflows for global equities for 4 straight weeks. Oil and gas have gotten shredded along with associated companies. Window dressing? Strong Dollar? Where is that money flowing to? As always, thank you for your work.
Todd Gray
Todd Gray Jun 20, 2022 2:42AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
The world markets are still ridiculously overvalued. Modern valuation fuzzy maths are about as honest as the CDC calling a cancer patient who in their final stage of life and in the midst of bi-weekly hospice visits - then contracts omicron two days before departing this world, a covid death. liberals have slit the throat of right action and right behavior.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email