John Kolovos: Long Yen And Short Oil In The Current Environment

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Includes: BNO, DBO, DJPY, DTO, DWT, FXY, JYN, NRGD, NRGO, NRGU, NRGZ, OIL, OILD, OILK, OILU, OILX, OLEM, OLO, SCO, SZO, UCO, UJPY, USAI, USL, USO, USOD, USOI, USOU, UWT, WTID, WTIU, YCL, YCS, YGRN
by: Real Vision
Summary

Despite the recent pullback, Macro Risk Advisors Chief Technical Analyst John Kolovos is maintaining a largely positive view on equities, “as long as we stay above the June 3 low".

As a hedge in this risk on environment, he likes buying the yen at current levels, with a target of 103.50 over the next two to three months.

Separately, he believes oil is in a secular bear market, and likes shorting it at current levels with a target of $38 over the next six months.

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.

Trade Ideas

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.

Secondly, Kolovos said he believes oil is in a secular bear market. "So long as oil stays below $60, it's a sell," he said.

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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