Long-term-investors are on alert, if the S&P 500 (SPX) comes back down below its 50-day average (2,700), we’re likely going to see another test of the 200-day average (2,656) with a better chance to break it and move into correction 2.0, writes Ziad Jasani this week.

My video commentary recorded June 18:

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Outlook – Long-term investors

Focus on risk management, accumulate U.S. dollar (USD) into Q3 (after a short cooling on the USD takes place), lighten up on Technology plays (US), keep a keen eye on Bank of Canada July statement for impact to housing market and Canadian big banks.

And if OPEC doesn’t play nice on June 22 meeting, expect Oil back into the high $50s and a unraveling of the money in Energy Equities.

If the S&P Composite/Toronto (TSX) finds itself back below 15,950-25 within the next two weeks, you are better off taking 1 tranche of your longer-term TSX holdings off the table.

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Outlook – Swing traders (Equities): we wrote about Equities Monday.

Outlook – Swing traders (Commodities)

We maintain our Short/Inverse trades on Precious Metals and Miners until we see Gold back above $1,285 and/or the USD cooling off.

We saw Oil attempt to hold above $66.89 but fail on June 15, and we went short below $65.51 and maintain said position until we see a swing-low forming between $64.66- $63.79.

Natural Gas broke above $2.988 triggering additions to our long positions, now waiting for $3.05 to break, if so we add to our longs.

Copper broke down below $3.22 and triggered additions to shorts/inverse trades, we maintain short Copper now below $3.17

Outlook – Swing traders (Currencies):

We maintain Long-USD (UUP) and Short Euro (EUR), while EUR/USD remains below 1.1646.

USD/CAD broke out above 1.30 with room to move up to 1.33, however we’re expecting the Canadian dollar (CAD) to shore up the end of this week (June 22) on hotter CPI and Retail Sales data but may start shoring up as the USD starts to cool-off early-to-mid-next week.

Look for longs on the CAD when Oil is forming a swing-low and the USD is cooling off.

Outlook – Swing traders (Fixed Income):

The recent flight to safety away from Eurozone Bonds and towards US & Japan sparked by Draghi on June 14 is slowing down. If the S&P 500 can find footing for a bounce above 2,759 (June 15 intraday low = 2,761.7) we could see a resumption in the rise of yields and a steepening of the yield curve.

This would mean we shy away from bonds and focus on accumulating Financial Equities (XLF, KBE, KRE, KIE, XFN-T, ZEB-T, ZWB-T).

The key here is seeing a confluence of a softening USD, rising US Treasury yields, a swing-low on Oil and Precious Metals and a clear bounce on the S&P 500 up off 2,759, led by Emerging Markets (EEM) bouncing up of $45, and of course Technology (QQQ, XLK, IYW, FNG) leading the way higher, with the cherry on top being trade war concerns being lessened and the Dow out-performing as well.

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