Some investors and traders are asking themselves how they might be able to profit from higher bond yields using stocks. MSFT is one that is worth taking a look at, on the short side.
With the recent move in bond yields (higher), coupled with what may turn into a risk-on Q4, we increasingly want to be long financial stocks such as banks.
https://vimeo.com/614011106 The energy sector of stocks remains on top of our radar for bullish opportunities into the fourth quarter. Within this complex, shares of Devon Energy (DVN) are increasingly looking ripe for another mover higher after a multi-month consolidation phase.
After a little market volatility over the past couple of weeks we are getting closer to what we think could be an appetizing buying opportunity for risk assets such as stocks into the fourth quarter. We may however have to get through another couple of weeks of volatility first.
In most ways, given the information we have so far, China’s Evergrande company default risk is unlikely to be the next global contagion risk like Lehman Brothers was. In fact, we think that after the Chinese government steps in, this could provide us the next good buying opportunity for risk assets into the fourth quarter.
After several months of muted sideways action, oil and energy related stocks finally saw a notable up-day on Wednesday Sept 15th. While one day does not make a trend, the move is worth watching closely for a new potential trend higher.
Stocks have been a slippery slope thus far in September and while this doesn’t mean everything has to fall apart from here (definitely not our base case), market internals are weakening somewhat. Here’s an update on our short/hedge position in the S&P 500 SPY etf.
Looking at how many stocks are registering new highs is an easy way to gauge a market’s strength. Currently the NYSE new highs reading is confirming that the market is a choppy mess. Take a look.
After another stellar rally of late by mega cap tech stocks, the reward to risk on the upside form a tactical trading perspective is getting worse by the day.
With the S&P 500 up 20% year to date and seasonal volatility in September and October a threat, a simple short position in the SPY (or long puts) is an idea worth thinking about, if only for a hedge.