Starting a new thread for May
Good day to buy protection with the market up 1000 points.
Market is very encouraging.
AAPL and TSLA, the two bellwether stocks, are above the ichimoku cloud, 50-day SMA and 200-day SMA.
Why buy protection here? The market is ~10% off the high. That happens once a year and is normal. What would be the catalyst to make it a 30%+ drop?
Increasing rates and reducing bond buy are both negatives. The fact the market rallied huge from that news is bullish. It’ll be difficult for negative news to move the market lower. The AAII survey is actually more bearish now than it was at the peak of covid when the economy was shutdown and GDP dropped 9.1% in one quarter which was 3x larger than the worst quarter on record (record keeping starting in 1947). Non-farm payroll dropped by 20.5M in April, 2020. We’re still adding 200k+ jobs a month and have more job openings than unemployed.
I feel like the full awareness that we will head into a (light?) recession has not hit yet.
Specifically, I bought some more SQQQ and some June SPY 350 puts.
By the time you are worried about it or thinking about it, the time has probably passed. It’s similar to when people start thinking about selling everything to avoid more losses.
TQQQ starting to look tasty
Haven’t been looking.TQQQ is so low already…
I’m glad I have my bond ETF puts to hedge some of this.
well my SPY puts printed today.
My HYG have not - I guess your premiums were low.
TLT and IEF are up more than HYG. Which HYG did you do? I have Sep $82 puts.
Sep 65 puts.
The average bear market duration is 289 days and the average decline is 37.3% (see chart at bottom).
Amazon down 1/3. Anyone buying?
SAAS, eCommerce and fintech stocks are dead till Fed stops tapering. Their valuation are too high.
Cash is King.
High growth stocks keep crashing. Highly likely be like dotcom bust. High growth stocks decline by 90% to 99% with many names disappeared. Currently only a handful decline by 90%, most decline less than 80%, and Fed is early into rate hikes and plenty of liquidity to be reduced. I got a feeling, there is still plenty of people on margin. Elon Musk is well known to be in heavy margin. Wondering how many billionaires are like him. Margin calls on them would be epic. Companies with founders holding a high percentage is not good, they are likely on margin.
A conspiracy theory,
Since they don’t pay income tax, penalized them by crashing their stocks, forcing them to be on margin calls and hence have to sell their shares (at low prices) and pay a hefty tax.
Cash is King.
I sold some dogs for ~25% loss and am licking my wounds - PATH, PINS, ATY.
Also trying to shift more into cash or just trade in and out of SQQQ/TQQQ.
Ditto. Cut the losses on my options as well, and staying conservatives. But I am holding my index and big tech.