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Updates 1:00 AM EST- Wednesday 6/16/21
FOMC announcement may trigger sell-off
It's hard to predict what the Fed will say, but the last three FOMC announcements (1/27, 3/17, and 4/28) have been followed by substantial multi-day sell-off for $SPX $NDX IWM. So we think it is prudent to go flat ahead of the Fed.
$USD building a base to rise
We discussed in Monday post about the impact of US dollars on bond prices, where cheap dollars have been spurring the demands for Treasury bonds by foreign buyers. Rising demands for Treasurys means lower yields, and that's favorable for growth stocks.
At this point however, it seems that the US dollar is building a W bottom to rise in the short term. (See UUP DXY charts.) Correspondingly, 30-year and 10-year Treasury bonds (TLT, IEF) are forming short-term tops, and 10-year US yield is steadily marching up, pivoting from the recent low of 1.43. It is currently almost 1.5.
This is not favorable for growth stocks such as $NDX. US dollar movement does not correspond tick by tick with $SPX $NDX IWM market movement. But it is important to understand and monitor the macroeconomic perspective, because it is the underlying force.