The trend for the S&P 500 is still systematically and objectively positive, Macro Risk Advisors Chief Technical Analyst John Kolovos told viewers of Real Vision's Trade Ideas.
Despite Monday's pullback roiling the markets, Kolovos said: "We need to view it within the context of what it is - normal, weak seasonalities and weak performance after a Fed cut." He remains bullish as long as the June 3 lows on the S&P 500 holds.
Underneath the surface however, there are several divergences that are causing Kolovos concern, including the weakness of financials, industrials, and small-caps relative to the S&P 500.
First, Kolovos likes being long the yen as a hedge. "I see the yen gaining flows for safe haven purposes. So, to protect myself, [I would] maintain being long the yen in this environment right now."
"If we get into a trade war with China, currency volatility is going to rep and accelerate, I think the yen is a good way to play it," he added.
He likes buying the yen at current levels with the target of 103.50 over the next two to three months and a stop-loss to 108.
He likes shorting oil at current levels via the futures market or the USO ETF, with a target of $38 over the next six months and a stop-loss at $60.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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