Bear season isn’t over, and the market is about to get shafted. Here’s why:
The fed talks recently confirmed the suspicion that the “V-shaped recovery” is a myth, and it’ll take years for the economy to fully recover from this crisis. The feds could never outright say “the market is cucked”, but they drop hints like these. In addition, inflation rates have decreased from 1.54% in March, to 0.33% in April, to 0.12% in May. We are dangerously close to deflation due to reduced consumer spending, and this is horrible for the economy/markets.
The fear of a second wave has obviously been around for a while, but it is recently picking up more steam. States like Arizona (who have been open for a while now) have reported a drastic uptick in coronavirus hospitalizations/cases. I know what you’re thinking, with more testing means more cases—which is true. But, more testing does not mean more hospitalizations.
The Buffet indicator is the composite market value of the market compared to the GDP. Levels over 30% are considered “overvalued”, while levels over “60%” are considered “strongly overvalued”. The last time the markets were considered over-valued was in 2000, during the internet bubble. Levels then were at 71%, and the market subsequently crashed. Currently, the indicator is at 74%.
- Hints from big money/institutions
It’s funny how everyone on WSB shat on Buffet for selling his airline stocks at the bottom. Do you really think a bunch of RH autists know more than the smartest investor in the world? No. Furthermore, institutions have begun liquidating more assets, pulling more money out of the market. Again, who do you think knows more about the markets, you? Or the century-old, extremely successful “big money” firms?
- Trump pump
If the market gets cucked before his re-election, he stands almost no chance at winning. Trump will do everything in his power to continue pumping the market. We know that JPOW and bunker boy have big beef, and my concern is that orange man bullies JPOW into more Brrrrr and talk of negative yield rates. Trump even claimed he could instantly fire JPOW (which we know isn’t as simple he says). This could continue to pump the market, extending the bubble further.
TLDR: economy will take a while to recover, deflation occurring, market is overvalued, corona hospitalizations increasing, big money / Buffet dropping big hints to sell, but Trump might pump markets up.
Plays: VXX calls, July expiry. Pick your poison with the strike price (whatever your RiSk tOleRanCe is). SPY puts, June/July Expiry.
My plays: VXX 7/10 45c. XLF 6/19 22p.
Edit: furthermore, CCP is anticipating companies being delisted/prevented from being on American markets. Source: www.investing.com/news/stock-market-news/china-finalises-new-ipo-rules-for-shenzhens-chinext-startup-board-2201048
Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence.