Greetings.

Today I want to illustrate the importance of staying with the trend; especially when things are going your way.

If you are short TLT or short bonds in some shape, form, or fashion according to our recent analyses, this is the post for you.

We recently shorted TLT near $148.00. The trade has gone very well and today we woke up to bonds being bid and gently floating higher throughout the day so far.

However, yesterday was a great day for a short bond position, as we got a 30-year bond auction that did not go well (lack of demand at lower yields), and bonds fell hard, especially on the longer end of the curve. The TLT is a 20-year product, so we get exposure somewhere in the middle of a 10-year note and a 30-year bond.

Figure 1 - TLT July 2, 2021 - July 14, 2021, 10 Minute Candles Source stooq.com

It can be testing to wake up to a market that is going your way, only to be moving the wrong way on the open and during the morning of a session. It is important to remember that markets do not move in a straight line, rather there are ebbs and flows.

To make today even more interesting in the bonds, we have Fed Chair Powell giving his Semi-Annual Monetary Policy Report before the House Financial Services Committee beginning in a few minutes (12:00 PM ET).

Prepare for more movement in the bonds. The daily chart still looks very bearish to me. We do have to deal with Fedspeak, but that is the way of the market.

In addition, PPI was indicative of inflation again today (no surprise after yesterday’s CPI print). I have no change in opinion for any of the markets that we are following today and am happy to allow the market time to digest the inflation as mentioned yesterday.

My big point today is if the big players didn’t want to buy the 30-year bonds in yesterday’s bond auction near $147.00 TLT, why would they want to today? I would think the Fed would have to sound extremely dovish for that to happen. We are about to find out.

Stay focused and stay with the plan.

• SPDR S&P Bank ETF (KBE) between $48.11 - $49.39/$50.00. Update 07/14: Consider getting long on the pullback in financials. CPI did not help financials today, and there are more bank earnings due out this week.
• Defiance Quantum ETF (QTUM) between $44.00 - $49.50. Update 07/14: This one is in the green today with the last trade at $48.95 (last time I checked). One of these days we will wake up to a breakout above the recent range and clear $50.47 IMO. This is a play in automation, robotics, and AI. Once this range is broken to the upside, I think we could see $55 - $60 rather quickly. Always use a stop loss level that caters to your individual risk tolerance.
• Amplify Transformational Data Sharing ETF (BLOK) between the 200-day moving average and $40.00 200-Day Moving Average is currently $41.56 Update 07/14: I’ve kept this one on the board, so I can keep monitoring it. It is getting closer and closer to the 200-day moving average. Crypto has consolidated for a long time now, and there could be another downside try. Wait for the pullback. Always use a stop loss level that caters to your individual risk tolerance.
• Invesco MSCI Sustainable Future ETF (ERTH) between $65 and $66. Update 07/14: Consider getting long on pullbacks to $66 or less. When looking at the chart, keep in mind there was an unusually large dividend paid on June 21st ($9.95 per share). So, the price had to adjust for it. Another way to look at it is by adding $9.95 to the current price to see the pre-dividend stock price. This has been good to us. This is a good play with the current administration and has been good to us so far. Always use a stop loss level that caters to your individual risk tolerance.
• Invesco Exchange-Traded Fund Trust - S&P SmallCap 600 Pure Value ETF (RZV) on pullbacks. Update 07/14: Small-caps have been a bit thorny since the Russell 2000 Reconstitution. This is below our initial long opinion level of $93.88. I do think small-caps will find love once again. Targeting $100 here. Always use a stop loss level that caters to your individual risk tolerance.
• iShares Global Timber & Forestry ETF (WOOD) Update 7/14: Trading near $88.40 today and continuing to monitor. This has been good to us. Premium Subscribers were notified in the June 16th publication to consider the first tranche of buying between $86.50 and $87.50. Look to add the 2nd tranche between $81.62 (200-day SMA) and $80.00. We are trading at $89.39 (last time I checked). Always use a stop loss level that caters to your individual risk tolerance.
• Invesco Solar ETF (TAN) Update 07/14: Pulling back, wait to add near the 200 day MA if we can get there near $80.29. If not on board, wait for a pullback; this one can move erratically in both directions. Targeting $100 - $125. Always use a stop loss level that caters to your individual risk tolerance.

I have SELL opinions for:

• iShares 20 Plus Year Treasury Bond ETF (TLT) when $TNX trades 1.291% or at the 200-day moving average of TLT ($148.47) / $147.75 - $148.47. Update 07/14: Stay short as we target $139.50 - $141.25 as potential take profit levels. A suggested risk to this trade is to a 2nd daily close above $153.16. Always use a stop loss level that caters to your individual risk tolerance. These levels can fluctuate, so please stay tunedAlways use a stop loss level that caters to your individual risk tolerance.

I have a HOLD opinion for:

• First Trust NASDAQ Clean Edge Smart Grid Infrastructure Index Fund (GRID). Update 07/14: Continue to hold. This has been a favorite. I have moved it to hold, as I do not suggest chasing it here. This has been a buy opinion from the May 6th publication between $86.91 - $88.17 Hold longs. I have liked this one for a longer-term-swing trade or longer-term holding, and am looking for signs to ring the register. Today, we are trading $94.41 the last time I checked, and I think it has a little more gas in the tank. Stay tuned. Always use a stop loss level that caters to your individual risk tolerance.

Thanks for reading today’s Stock Trading Alert. Your readership is valued and appreciated. Have a great afternoon!

Thank you,

Rafael Zorabedian
Stock Trading Strategist