Strategic Update: February 24, 2022 (PREMIUM-UNLOCKED)

The following post was originally issued to TLS members on the morning of February 24, 2022.

The investing fog of war.

Conditions have been setting up for a potential short-term or even intermediate-term low in the market. Perhaps the biggest preventative to that event has been the multitude of investors looking for such a bottom. So, how do you get them off such a stance? Well, a war doesn’t hurt. Sure, many talking heads have been mentioning the old Wall Street saw, “when bombs start flying, you should start buying.” However, that is very difficult for folks to do, psychologically, when actually faced with a conflict scenario like we are facing. However, it is just that uptick in fear that is needed to form an important low. So, while this may not be the ultimate low, we are shifting out Short-Term Outlook to BULLISH and covering some of our shorts…so far:

  • We sold (covered) 1/3 of our hedge (short) position in the inverse (short) S&P 500 fund, SPXS, near ~24.10
  • We sold (covered) 1/2 of our hedge (short) position in the inverse (short) Europe fund, EPV, near ~13.74
  • *UPDATE: We added further exposure to our position in the long Euro fund, FXE, near ~103.48*
  • *UPDATE: We sold (covered) 1/3 of our hedge (short) position in the inverse (short) small-cap fund, TZA, near ~40.00*
  • *UPDATE: We sold our speculative position in the Russian ETF, RSX, near ~15.00 (I guess war > Fibonacci)*
  • *UPDATE: We sold 1/2 of our remaining position in the natural gas fund, UNG, near ~17.12*
  • *UPDATE: We sold our position in the long Euro fund, FXE, near ~104.00*
  • *UPDATE: We sold (covered) the rest of our hedge (short) position in the inverse (short) Europe fund, EPV, near ~13.21*
  • *UPDATE: We sold (covered) the rest of our hedge (short) position in the inverse (short) oil & gas fund, DUG, near ~31.62*
  • *UPDATE: We sold (covered) the rest of our hedge (short) position in the inverse (short) Nasdaq 100 fund, QID, near ~20.50*

*UPDATE: Based on the support levels, we probably should have covered some of our short exposure in the mid-cap and Nasdaq 100 (didn’t quite get there) on the open. With that being said, one reason we haven’t been more aggressive in short-covering, or buying, is that we are seeing an expansion in some risk indicators, rather than a divergence as prices re-test the January lows. One prime example is the increase in new lows on the Nasdaq and NYSE above late January levels. That suggests further downside ahead…eventually. That does not preclude a decent bounce in the meantime, though, so we’ll likely look to cover some more short exposure into further intraday weakness.*

That’s all for now, but expect more to come. Check back on this post throughout the day for further portfolio moves. And as always, stay tuned to our DSS posts for further developments — they provide the most current updates to our investment portfolio and outlook.

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Disclaimer: JLFMI’s actual investment decisions are based on our proprietary models. Commentary provided here is for informational purposes only and should not be taken as a recommendation to invest in any specific securities or according to any specific methodologies. Proper due diligence should be performed before investing in any investment vehicle. There is a risk of loss involved in all investments.