Not Shopping for The Bounce

Shares ripped larger Tuesday, regardless of all of the acquainted macro headwinds remaining in place: report inflation, rising rates of interest, pending revenue downgrades, the continuing Ukraine Conflict, plus added tensions with China.

“When she’s not busy exercising name choices on Nvidia, Inc. $NVDA shares to revenue from pending laws, or bailing her husband out of jail for a DUI arrest, Nancy Pelosi…” Provokes China � over Taiwan �.https://t.co/3tM9s49YBM

— Portfolio Armor (@PortfolioArmor) July 19, 2022

There was aid on information that Russia deliberate to restart gasoline deliveries by means of its Nord Stream 1 pipeline on Thursday, however after hours there was unfavourable information on each Nord Stream 1 and inflation. Germany’s DW Information reported feedback by Russian President Vladimir Putin that gasoline provides by way of Nord Stream 1 may very well be additional diminished, on account of upkeep work. 

President Vladimir Putin stated Russian gasoline provides to Europe may very well be additional diminished, on account of upkeep work in Nord Stream I pipeline. https://t.co/escvAyx2Pt

— DW Information (@dwnews) July 20, 2022

And June inflation knowledge within the UK got here in crimson sizzling. 

� *UK JUNE CONSUMER PRICES RISE 9.4% Y/Y; EST. 9.3% *UK JUNE CORE CPI RISES 5.8% Y/Y; EST. +5.8% *UK JUNE RETAIL PRICE INDEX RISES 11.8% Y/Y; EST. +11.8%https://t.co/lqXRk7JLAk

— Christophe Barraud🛢🐳 (@C_Barraud) July 20, 2022

Lengthy Power, Brief Treasuries and Tech

Our system does not take into account the macro image when choosing its prime names. As an alternative, it gauges inventory and choices market sentiment to estimate which securities are more likely to carry out the most effective over the subsequent six months. Nonetheless, that bottoms-up strategy painted a reasonably clear image in our prime ten names as of Tuesday’s shut: 

• Lengthy Power: ProShares Extremely Bloomberg Pure Fuel (ARCA:BOIL), Direxion Each day S&P Oil & Fuel Exp. & Prod. Bull 2X Shares (ARCA:GUSH), Valero Power Corp. (NYSE: VLO), Comstock Assets, Inc. (NYSE: CRK).
• Brief Treasuries: Direxion Each day 20+ Yr Treasury Bear 3X Shares (ARCA:TMV), ProShares UltraPro Brief 20+ Yr Treasury (ARCA:TTT).
• Brief Tech: Direxion Each day Dow Jones Web Bear 3X Shares (ARCA:WEBS)

Display seize by way of Portfolio Armor on 7/19/2022.

A Hedged Wager In opposition to Tech

WEBS is a 3x levered guess towards the Dow Jones Web Composite Index. That index contains forty shares of the most important firms that get half or extra of their revenues by way of the web, every little thing from Amazon, Inc. (NASDAQ: AMZN) to Netflix, Inc. (NASDAQ: NFLX). After all, triple-leveraged ETFs might be extraordinarily dangerous, so this is a manner to purchase it and cost-effectively hedge in case we’re unsuitable. 

As of Tuesday’s shut, this was the optimum collar to hedge 1,00zero shares of WEBS towards a greater-than-25% drop, whereas not capping your potential upside at lower than 50% over the identical interval. 

Display captures by way of the Portfolio Armor iPhone app. 

Greatest case state of affairs, you are up 50% by December; worst case state of affairs, you are down 25%. And you are not paying something to hedge.