Inflation is running hot and rate hikes are looming — brace for a tech pullback
Created
Thesis
Higher inflation is currently the market's biggest fear because it forces the Federal Reserve to raise interest rates, which makes borrowing more expensive for everyone and tends to slow down the economy. With expectations set at 4.2% and major banks like BNP Paribas predicting multiple rate hikes, any confirmation of these numbers in Wednesday's report will likely trigger a swift market sell-off. Tech stocks and growth companies are hit the hardest in these scenarios because their future profits look less appealing when interest rates go up. Positioning against the broader market leading into this news is a smart way to protect capital and potentially profit from the dip.
Strategy approach
Build a short-biased mean-reversion strategy on QQQ using the daily timeframe. Enter a short position if the CPI year-over-year report (released Wednesday morning) comes in at or above 4.2%. Use an RSI(14) reading above 60 as an overbought confirmation to enter the trade. Set a hard stop-loss at 3% above the entry price, and take profit when the price touches the lower Bollinger Band (20, 2) or after 5 trading days, whichever comes first.
Markets and timeframes
Entry and exit at a glance
These are the named rules in the shared configuration. Review the full conditions below before using a strategy.
- Entry: RSI Signal Short (QQQ@1d) (1 condition)
- Exit: Stop Loss at 3.0% (1 condition)
- Exit: TP: Position Exit Rule (QQQ@1d) (1 condition)
Shared strategy rules
Rule configuration
{
"data_dependencies": [
{
"symbol": "QQQ",
"timeframe": "1d"
}
],
"entry_rules": [
{
"conditions": [
{
"left": {
"chart_ref": {
"symbol": "QQQ",
"timeframe": "1d"
},
"indicator": {
"name": "rsi",
"period": 14
},
"type": "indicator"
},
"operator": "greater_than",
"right": {
"type": "constant",
"value": 60
}
}
],
"direction": "short",
"enabled": true,
"id": "entry_1",
"name": "RSI Signal Short (QQQ@1d)",
"priority": 1
}
],
"exit_rules": [
{
"applies_to": "both",
"conditions": [
{
"left": {
"field": "unrealized_pnl_percent",
"type": "position"
},
"operator": "less_than_or_equal",
"right": {
"type": "constant",
"value": -3
}
}
],
"enabled": true,
"id": "exit_1",
"name": "Stop Loss at 3.0%",
"priority": 10,
"purpose": "stop_loss"
},
{
"applies_to": "both",
"conditions": [
{
"left": {
"field": "close",
"type": "price"
},
"operator": "less_than_or_equal",
"right": {
"chart_ref": {
"symbol": "QQQ",
"timeframe": "1d"
},
"field": "lower",
"indicator": {
"name": "bollinger_bands",
"period": 20,
"std_dev": 2
},
"type": "indicator"
}
}
],
"enabled": true,
"id": "exit_2",
"name": "TP: Position Exit Rule (QQQ@1d)",
"priority": 1,
"purpose": "take_profit"
}
],
"position_sizing": {
"max_position_percent": 25,
"method": {
"risk_percent": 2,
"stop_loss_percent": 3,
"type": "fixed_risk"
},
"min_position_value": 100
},
"trigger_timeframe": "1d",
"version": 1
}Indicator configuration
{
"indicators": [
{
"name": "rsi",
"period": 14
},
{
"name": "bollinger_bands",
"period": 20,
"std_dev": 2
}
]
}Parsed strategy
{
"data_dependencies": [
{
"symbol": "QQQ",
"timeframe": "1d"
}
],
"entry_rules": [
{
"conditions": [
{
"left": {
"chart_ref": {
"symbol": "QQQ",
"timeframe": "1d"
},
"indicator": {
"name": "rsi",
"period": 14
},
"type": "indicator"
},
"operator": "greater_than",
"right": {
"type": "constant",
"value": 60
}
}
],
"direction": "short",
"enabled": true,
"id": "entry_1",
"name": "RSI Signal Short (QQQ@1d)",
"priority": 1
}
],
"exit_rules": [
{
"applies_to": "both",
"conditions": [
{
"left": {
"field": "unrealized_pnl_percent",
"type": "position"
},
"operator": "less_than_or_equal",
"right": {
"type": "constant",
"value": -3
}
}
],
"enabled": true,
"id": "exit_1",
"name": "Stop Loss at 3.0%",
"priority": 10,
"purpose": "stop_loss"
},
{
"applies_to": "both",
"conditions": [
{
"left": {
"field": "close",
"type": "price"
},
"operator": "less_than_or_equal",
"right": {
"chart_ref": {
"symbol": "QQQ",
"timeframe": "1d"
},
"field": "lower",
"indicator": {
"name": "bollinger_bands",
"period": 20,
"std_dev": 2
},
"type": "indicator"
}
}
],
"enabled": true,
"id": "exit_2",
"name": "TP: Position Exit Rule (QQQ@1d)",
"priority": 1,
"purpose": "take_profit"
}
],
"position_sizing": {
"max_position_percent": 25,
"method": {
"risk_percent": 2,
"stop_loss_percent": 3,
"type": "fixed_risk"
},
"min_position_value": 100
},
"trigger_timeframe": "1d",
"version": 1
}Strategy instructions
Trading agent generated from recommendation idea 'Inflation is running hot and rate hikes are looming — brace for a tech pullback'. Thesis: Higher inflation is currently the market's biggest fear because it forces the Federal Reserve to raise interest rates, which makes borrowing more expensive for everyone and tends to slow down the economy. With expectations set at 4.2% and major banks like BNP Paribas predicting multiple rate hikes, any confirmation of these numbers in Wednesday's report will likely trigger a swift market sell-off. Tech stocks and growth companies are hit the hardest in these scenarios because their future profits look less appealing when interest rates go up. Positioning against the broader market leading into this news is a smart way to protect capital and potentially profit from the dip.
Performance
No trade count, win rate, or realized P&L figures are provided in this public preview. The thesis and shared rules do not establish a performance record.
What this public preview can establish
- The thesis and strategy approach describe a market view. They do not show whether an entry or exit condition is currently met.
- Technical strategy fields are shared above. Inspect the actual conditions and check when they were evaluated before relying on them.
- No trade count, win rate, or P&L figure is published in this preview. It cannot establish a performance record.
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