S&P500 SHORT MARKET OVERBOUGHT

2020년 5월 1일

We've seen a more than 50% retracement from the lows of the collapse. That was predictable.

Now it's time for the short/mid term crowd to take profit, and we are already seeing this process. The trade is partly technical, partly fundamental too.

I believe there is a recession ahead and stocks are way too expensive for such scenario.

Looking form a technical perspective, those who had cash and were buying, have already bought. The buybacks, that were the key driver of the stock market are supposed to dry up. There is no extra cash now in the companies coffers. Especially given that even with the fed stepping in, the debt market is shallow, and companies can't borrow nearly as much as they could before the lockdown.

The trade is short term in theory, and I will close half the position at the first take level. however, that might prove to be a half a year trade eyeing the -50% market-to-market fall. We are clearly in a bear market now, and I remind you, that bear market is a bitch and is very hard to trade. So your risk management should be supreme.

Guys, please, support the channel with the like. I rally appreciate that!

Wish you luck!

2020년 5월 2일

노트

There was a good question below, about why these specific takes. I guess it is worthwhile answering it for you all here: The first one is a 1:1 risk reward. I like to get some cash back from the trade when It starts yielding. Helps a lot psychologically. The second one is almost exactly half of the retracement. First wave was the initial fall, the second was the retracement, that was half the fall, and the third one would be half the retracement. I must admit, that while stops are always well justified, takes might sometimes be subjectively arbitrary. Just the experience. One knows what to expect from the trade.

2020년 5월 2일

노트

I must add also, that I am planning to enter the trade on Monday, so If the market opens with a big gap, I will have to re-evaluate the setup.

2020년 5월 4일

노트

I am in the short!

2020년 5월 11일

노트

I am still short. I use call options to hedge against gaps overnight.