When the Trend is Not Your Friend – A Trading Plan

Currently, if we examine the and the retail sector through the SPDR® S&P Retail ETF (NYSE:), our anticipated conclusion is that, for the most part, stocks are a distraction.

The obvious trend is down, but is it so obvious at current levels?

Looking at the chart, we could be bracing for a mid-return trade (bear market bounce that can take SPY back to 380.) So, are you selling right now? Maybe, but SPY has to break 360 first.

Granny Retail XRT, also in a downtrend, has good bottom action and outperforms the SPY. Additionally, the momentum on the Real Motion indicator continues.

This makes it quite simple.

Either XRT holds here and clears the 200 week moving average and the 62.50 level to rally further, bringing the SPY with it….

Or, SPY fails at 360 and takes XRT lower with it, causing XRT to potentially break stronger below the 200-WMA or near 50.00.

So if it’s that simple, why do we think stocks are more of a distraction right now?

IBB-FXI-Daily Chart

Trends are meant to be your friend. But right now the trend looks a bit treacherous for both bears and bulls.

Biotechnology, the first to bottom in 2009 after the mortgage crisis, has been on a strong downtrend and is well below the 200-WMA. However, IBB also outperforms the SPY and shows some balance in momentum.

Can it hold if SPY fails 260? Doubtful.

So what are we loving right now?

China, raw materials and cannabis.

CRB-MSOS-Daily Chart

We are all about trading opportunities with the best risk.

China, via iShares China Large-Cap ETF (NYSE:), a position in our portfolio, might be something to add. As the United States does QT, China does QE.

Commodities () have been trending up and correcting into support. With the worst global inflation rates in 40 years and stagflation on the horizon, we will continue to strengthen our tactical commodity positions.

Cannabis, via AdvisorShares Pure US Cannabis ETF (NYSE:), in which we are on the sidelines at the moment, continues to intrigue us. If stocks go up, so will this sector. And if stocks are falling, the momentum indicates that the selling has all but dried up.

Our wallet stays in the dark and for the underwater people, stay tuned for more ways to inflation proof YOUR wallet and mitigate inflation. We see attractive sectors and wait for the right time to execute. –

ETF Summary

S&P 500 (SPY) 380 resistance 374 pivot support 360 major support

() 159 support 175-177 great resistance

() 294 support

() 290 resistance 263 great support

(Regional banks) 56 resistance 200 WMA 60

(Semiconductors) 195 minor support with resistance at 220

(Transportation) 211.87 resistance 200-WMA 192 support

IBB (Biotechnology) Another potential double bottom-110 pivot-112.50 resistance

XRT (retail) 60.62 the important 200-WMA support closed just below – an upside gap on Tuesday would look convincing for a rally

Garland K. Long