US Market, Short retrace or all the way down?

17 февр. 2023 г.

10YY is back at Dec 2022 high, yet S&P is far from Dec 2022 low.


100Y has broken out above resistance. The dollar continues to show strength.


No doubt, there is bound to be a market retracement coming up. If you FOMO during the last week, you may want to trim some long positions.
The next question is, will a new higher low be created?

There are 2 possible scenarios ahead

1) S&P bottom at a level higher than 3800 (Dec's 2022 low), hence a higher low. Inflation continues to decline. The dollar continues to weaken. Soft landing and bull market is confirmed but it won't be as strong as the 2020 post covid.
2) YoY Inflation creates a higher low and rises back above 6.5%. The dollar continues to rally. 10YY continues to rise and retest the high at 4.3%. Then we may see S&P breaking 3800 and maybe even restest 3500.

Our portfolio is neutral for Feb 2023, but we may start pivoting to short bias. We have shared a few potential shorts (AAPL and HD). However, a short bias portfolio does not mean the entire portolio is filled with SQQQ or CFD S&P short. By playing a careful selection of individual stocks, we can choose the degree of our bearishness. We are still carrying some long positions in the utility/clean energy and shipping sector.
As we see more data, we will get more bearish or less bearish.

DYODD