Technicals suggest it’s right to play the "De-escalation trade"

Note: Due to overseas travel this week, the publishing schedule will be erratic and might be postponed for one or more nights. I'll make the best effort to get important technical developments to you as they occur.

A bottoming process to this selloff looks to have begun, given the combination of minor trend and momentum improvement and some more substantial boost in market breadth.  While sentiment remains muted and positioning is negative ahead of tomorrow’s deadline put forth by the Administration, the action of both the US, as well as many developed and Emerging markets Equity indices seems to suggest markets are preparing for either a resolution or another postponement (the latter, which seems less likely). Both Financials and Technology have begun to show better-than-average performance lately, and the pattern in WTI Crude oil looks conducive to peaking out within the next week.  Thus, I’m fully onboard with attempting to play the De-escalation trade given our 9% pullback off the peaks, which has now begun to stabilize. While the weeks ahead could still prove choppy, I’m fairly confident that lows to this Spring selloff might be in place, and a push to new weekly highs over the next week would help to serve as confirmation. The risk/reward looks quite favorable to own US Stocks on this drawdown from January, expecting a gradual recovery back higher between April/May and August of this year. 

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