Equities Falter Into the Close Ultra Bonds Well Bid

GFBP Stays Hedged Long

Before we get into the GFBP Positions Tracker, let’s look at a few charts. The Nasdaq was higher most of the day but the overall equity weakness proved to much. We have posted this level prior as a potential short term exhaustion this 10600/700 area and the 4hr chart with our trend channel seems to have brought in some technical sellers. Although we continue to see QE being put to work as the FED steps up their purchases, we have to think at some point profits will be taken. This channel may just be one of those nice little technical boundaries that offers us some clarity:

We can also note that Tesla has hit the Fib. extensions that have noted as well. We would certainly expect a bit of profit taking here and to be honest a reversal from here or at least a decent consolidation downward makes perfect sense:

As far as the SP500 You know how important that 3165 level is and all of this gives us the rational expectation that a bit of downward consolidation makes perfect sense. However this doesn’t mean we don’t agree with the GFBP model and its hedged long, rather we suspect a bit of frothyness will be worked off here and that is actually longer term bullish and constructive for the continued bull case:

As we noted in the title, the Fixed Income sector was led by the Ultra Bond as the rally in bonds pushed the curve flatter on the day as the long end outperformed a few handles higher is our target here:

We are also watching the US Govt 10Y yields and the 58bp level as the 3 month consolidation continues to roll on:

Now on to the tracker which continues to favor equity long exposure. However we would note that the program given the extension levels does also recommend 1 to 2 unit put protection in the SP500 as a hedge here and as warranted also by the technical’s which we have pointed out prior here. The only change you can note is the roll in the Crude from August to September. The program gave back a bit today given the overall long equity exposure, please note the Positions Tracker does not take into account any option hedges that we have spoken of:

Finally to our settlements for July 7th 2020 as noted the Ultra-Bond contract was the big winner on the day with the Dow the big loser:

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