Portfolio construction and the game whack a mole seem to have some in common of late….Key assets have been looking for a place to hide!
The 3-pack below reflects that the US Dollar and Government Bond ETF TLT have broken below steep rising channels. At the same time the S&P 500 is could be slipping below a steep rising support line.
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If you have been looking for a place to hide the past couple of weeks, it might surprise a few that the Euro ETF FXE and done pretty darn well, with Crude Oil not far behind. Government bond ETF TLT which had a stellar last year, has had a rough go of it lately!
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The declines in bonds and the US$ are near extremes for such a short period of time. It wouldn’t surprise me to see a move in the opposite direction (for a few days) for the assets that are at both extremes!
Three weeks ago the Power of the Pattern shared the stage was set for a strong rally in Crude Oil was due and to establish the pair trade of Long XLE and Short SPY. (See Post Here).
Bottom line…It has paid to buy low and sell high of late in these key assets!
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