One thing I have learned trading this market for many years is that the fundamentals always play out. The question is all about timing. If you sold when SPX was near the bottom, you’d be massively screwed.
The fundamentals are bad. Unemployment figures are rising. Many companies have slashed a ton of their profits. Even though the economy is about to re-open, the impact of this on the stock market hasn’t been felt yet and the effects will last a long time.
The truth is that this drop never happened because of COVID in the first place. It happened because of companies being overvalued and inflated resulting in an eventual collapse. COVID was just a trigger and those fundamentals are still in play. Just two years ago, nearly half of unicorns overstated their valuations, and it got much worse last year and this year: www.barrons.com/amp/articles/the-vc-bubble-is-going-to-burst-51553077853. The VC bubble still hasn’t popped yet.
Now, why do I think it is finally time that we drop now, and why do I think we drop this fast? Why do I think this is not just another one of those “Haha it’s going to crash” posts we’ve seen over the last two months? It’s simple. Retail volume has been washed out and reached a peak last week. You can see this through aggregate order flow on stocks most traded by retail such as TSLA (which will drop the hardest). You can see this through the number of people holding stocks like that on Robinhood which has the most retail volume. The influx of retail traders reaching a peak during a rise or during a drop (which occurred at low 220s) is generally indicative of a top or bottom in case of a downtrend.
When retail volume peaks in a market where the fundamentals are telling the opposite story, you go short, and you go bigly short.
TL;DR P SPY 240 MAY 22
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.