Make or Break Coming Up? - Trading Journal (10.25.20)

in LeoFinancelast month

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If it was not obvious enough last week there was more evidence that a rotation out of growth/momentum stocks and into value relative to the year. This is a possible sign that markets will sell off since rotation is occurring. It is not exact science but thinking logically if someone is to profit in the market and buy low they would have to sell off what is profitable currently and buy what is considered cheap. That means high growth stocks shares sell and value stock shares buy.

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All in when it comes to investing appears to be at an all time high. Not to say it can not go any higher but currently this is reaching saturation where there would be less buyers. The need for price to continue rising will need buyers but fewer of them may result in a flat to lower markets.

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Reality in the mass transit participation in New York City is shown in chart above. Clearly not a lot of people commuting since Covid outbreak. A vaccine is potentially entering for public use a lot sooner than anticipated which may boost participation down the road, but for now not an ideal recovery for the real economy.

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The US deficit is at its highest since Bush era. So how is it that the US can still be in a positive trajectory toward recovery when so much resources are being taken out of the country. There is not as seen by the real economy. The stock market maybe ignoring this for now but it may come back to haunt it.

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The printing or processes FED have implemented to make more money is not working. The flow of money is still slowing at with that the real economy.

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Yet I will close out with this chart to remind myself currently why and if I go short the stock market it must be short lived, because a lot of other traders/speculators currently believe the SPY will fall. When majority expects something to happen usually the opposite will happen. I am currently believing a big short squeeze is coming and will truly trade that position once I have confirmation, but certainly not looking good for shorts as the present puts in SPY is a lot more relative to historical data. This is likelihood in anticipation of a Feb/Mar crash. When people least expect it will that happen in the markets.

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Again repeat index SPY, QQQ, SPX and others are getting one of the highest Put to Call since Feb/March, but this was after the crash. Obvious a lot of hedges are being placed and does not necessary mean markets will not drop, but doubtful there is a rug pull and doubtful the fall will be significant pre or post elections until this put to call drops back down.

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