Public trading strategy
New Fed chief sounds tough on inflation — protect your portfolio with bond ETFs
Thesis
Higher interest rates act like a brake on the economy and make safer investments like bonds more attractive compared to stocks. The new Fed chief is sounding much tougher on inflation than Wall Street expected. This surprise hawkish stance usually triggers a pullback as investors adjust to the new reality.
Strategy approach
Build a mean-reversion or short-bias strategy on SPY using the daily timeframe. Enter short if the ETF closes below its 10-day moving average. Exit if it closes back above the 10-day moving average, or hold for 7 days maximum.