Do not initiate new shorts here!
Too late!
Do not initiate new shorts at this juncture!
Right now, futures are up around 1.3% on the $IWM, so deduct that from my call.
I looked through all my short systems and small cap value momentum systems:
Shorting systems not making higher highs and small cap value momentum systems all sitting at support.
Also, the $IWM had a similar drawdown in 2018, $QQQs are worse than 2020 and 2018!
In my opinion it is not 2008 or 2000. I wrote around November last year that I expect a price action comparable to 2011 or 2018. We already saw something like 2018.
The bad news are out:
· Fed
· China Lockdown
· War
· Energy shortage
SARK had a blow off top yesterday.
PTON had a bad outlook report, it’s up premarket.
KWEB not making lower lows. 20 out of 40 Country indices are not making lower lows (while the US makes lower lows!).
Even with a higher inflation print today, I think we are going to rally.
Tons of puts, dealers have protected themselves and defend the 4000 put wall on the SPX. My best guess is Dealers are protected already, everybody is protected and now flows start to come into the market. Dealers will have to lift their shorts and that could lift the market. https://us20.campaign-archive.com/?u=10c1573d674912d3ff94684d7&id=f8c4eb1672
High beta names do not (!!!) show relative strength in absolute terms (which is going against my call!).
But calculating their Beta (ARKK around 3-4) the mirrored the move of the SPY and are not weaker than SPY right now (if you count in their high beta). They are losing beta, which is a good sign.
Yes, we are at negative gamma and the left tail is bigger than the right tail, I get it! But we already tested the left tail quite a bit.
Leaders have been sold off with laggards. Everybody is destroyed and ready to give up.
Bears are complacent (“I told you so in November” posts on twitter!).
I am getting DMs all over the place on how to hedge portfolios, the pain is very high right now.
My best guess:
Do not initiate any new (!) shorts here, especially not on ARKK high beta names!
Going longer here? Tough call! I would need to see relative strength on ARKK names in an absolute way. But if that is going to be printed, I definitely go longer.
I added to my shorts yesterday at the open but will reduce at the open today.
Disclaimer: For educational purpose only. Not investment advice. Seek professional advice from a financial advisor before making any investing decisions.