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Discussion
I’m still in the process of writing up my detailed May FOMC thoughts, but in a nutshell a seemingly dovish Chair Powell delivered a very hawkish shift in policy, arguably even more hawkish than I was anticipating. Given the NDX Group’s weak relative strength position ahead of what is likely to be a weak AAPL ER and the likelihood the long end of the UST curve begins its next leg higher in response to a strong NFP report tomorrow (Powell blessed the move in rates yesterday, which is key), I took two actions today:
In the WOTE US Core Equity strategy I liquidated all sector exposure and bought SPLG. Going sector by sector, industry by industry, and stock by stock, it is extremely difficult to gain conviction here for deploying active share in any material size. As such, I want to be perfectly neutral against my SPX benchmark while I sit back and wait for fat pitches to emerge.
In WOTE Special Ops, I took a modest position in QQQ May 3 and May 6 $424p with room to add in the event Wall Street wants to continue the very obvious distribution process currently underway ahead of much lower equity prices in the coming weeks.