May 24, 2022, 11:11 am EDT
Another Tumble from the Technology and Retailer
The stock markets tumbled again led by the technology (SNAP -40%) and retailer (ANF -25%). Some highlights are shown below:
- Technology: SNAP -40%, PINS -28%, ROKU -16%, FB -10%, GOOGL -8%, TSLA -5%
- Retailer: ANF -25%, UAA, JWN, KSS -7%
The downtrend of these sectors is solid and sharp. About 90% of stocks follow this trend so the winning chance is very high by having bearish bets on these sectors. In fact, the entire markets and indexes behave consistently with this downtrend. It means that majorities of the bearish bets against indexes or individual stocks are going to be profitable.
While the rate hike process starts and balance reduction will being in June, the downtrend is likely to intensify. Needless to say, any long positions are going to be tested. Cutting the losing positions quickly would protect the portfolio and provide peace of mind for the downtrend market.
The following areas may appear in the headline news soon as the coming candidates for collapsing:
- Homebuilders
- China Stocks
As mentioned yesterday that any rebound is a trap. Getting back to the bear markets during the short term bounce is highly risky. If you do not know how to operate bearish bets (short / put option), it would be good to stay in cash positions as a shelter in the middle of the storm.
The storm will go away eventually so that we can get out to hunt again. However, the bear markets could be one or two years in duration. So, please stay safe.
