PAIR TRADE: Long XLU vs. Short XLY

PAIR TRADE: 10% each side

Long XLU @ $74.25

Short XLY @ $189.36

My total positioning rules should be clear by now: when volatility spikes, I reduce my gross exposure. When it falls, I add gross.

With the VIX below 20 and holding, it's a day to build up some gross exposure.

My market view remains that we'll chop or trend downward from here in equities and rates will be downward, especially at the long-end as the Fed raises shorter-term rates into a sensitive economy.

That said, buying utilities gives me rate sensitivity. And shorting consumer discretionary benefits if/as the economy slows. So this trade is in-line with my broad view.

Utilities are cheap. If rates keep rising, the downward pressure on allowed returns will ease. If rates fall, the somewhat fixed-income stream of income will be worth more. But I'm a fanboy...