April 6, 2022

The Nasdaq has put in two stiff, down days caused by jumps in the yield on 10s.

This has occurred as Fed Gov. Lael Brainard made bearish comments on interest rate policy, suggesting that the Fed could begin raising the overnight fed funds rate in half-point increments vs. the usual quarter-point change. She said, the Fed would begin "to [reverse QE] at a rapid pace."

Brainard's comments roiled the bond market, with the yield on 10s jumping a major 14 bps Tuesday, followed by another 5 bps Wednesday. This means the yield has rocketed by nearly 1 full percentage point in only five weeks.

Otherwise, while the bulk of the swift March rally is intact, the view here has been that this was a playable rally in a bear market. When playing a contra-trend rally, one must be willing to lock in smaller gains than usual.

Leadership is centered in the oil & gas explorers and fertilizers. None are worth looking at on the long side.

As for the short side, we see the SQQQ below. This inverse ETF touched the 20 ema today. Ideally, we would like to see it rally above the line and then pull back for a possible entry. Technically, however, the short-term trend has already changed from down to up because price printed a higher pivot high today. This goes along with its higher pivot low put in Tuesday.

Let's be open, then, to a possible long entry here should it materialize in coming sessions.

Nothing is shortable at present. The best thing that could happen to the short side would be for a rally which would provide us with some setups.  The software issues are still believed to offer the best potential, although the low-hanging fruit does not exist as it did previously. Then, we were able to take 13 of 15 winners on the short side for an 86.6% win rate.

Please note that 15 trades is a statistically insignificant sample size. At 30 trades, it becomes significant. E.g. some FDA clinical or pre-clinical trials use sample sizes of 28 patients.

In summation, there is nothing close to compelling for us to do. Let's be patient until something with the right reward-to-risk ratio presents itself.

Kevin Marder

Trading Lessons
Introduction to the service (38:00)
Money management and risk management (20:27)
Bread and butter pullback (11:10)
Bread and butter pullback: Pt II (15:09)
Bread and butter pullback: Pt III (31:48)
Bread and butter pullback: Pt IV (30:16)
System R
Short-selling (25:53)
Wyckoff spring reversal (2:30) 
5-minute breakup test (8:01)