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Is the bear market rally over

  • Yes the bear market rally is over

  • it is not a bear market

  • no the bear market rally has further to go


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Discussion Starter #1
I set the poll up so you can change your vote so viewers can watch the change in sentiment as the market rallies & falls.
 

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Well, markets can't go (up/down) forever. Herd sentiment is a real thing. Markets are below the 200 day moving average so it is still a bear market to me. That means it is still time to accumulate shares. Buy now, because when there is an actual vaccine and the world opens back up, that will be the time to sell or reduce exposure.
 

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Discussion Starter #3
In the DJI the decline was 27 days so far the rally was 26 days on April 29. The rally retraced 58% of the decline on diminishing volume. Diminishing volume is indicative of a bear market rally. The S&P has retraced 63% of the decline on its recent high of April 29th.
 

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Discussion Starter #4
Interesting out of 8 votes no one voted for still in a bull market. lonewolf is not a lone though maybe the rest of the pack is not shorting ? Not looking good for my short position
 

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What puts are you buying lonewolf? I've bought three SPY 200 Sept 2020. Thinking about going to 10 puts. Probably small beans for you. Should I be going out longer? higher strike? Lower strike?

IMO, the future of the corona virus, whether it comes back strong or not next winter, is no longer a major factor for markets anymore right now. Whether or not jobs and spending pick up to expected levels when lockdowns are lifted is the huge elephant in the room. Analysts are saying 15-30% of layoff are going to permanent. I think that number is low, and it is based on old (a few weeks ago) layoff numbers, not whatever the peak is (still to come).

The media and government are proven to be excellent at whipping up a frenzy and fear to keep people glued to the TV and to approve of more government spending. It is yet to be seen whether then can do the opposite and whip up enthusiasm for thousehold spending and private sector jobs giving.

The noticeably vocal provincial level and city level governments are going to be a big problem for a "smooth recovery", as varying policies and spending programs of various effectiveness and stupidity are unevenly applied across the economy, causing doubt and chaos, and preventing all the re-hiring that is predicted.
 

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Yes it's interesting that nobody thinks we're in a bull market even though it's clearly a possibility. In fact, the economy could tank and everyone could become unemployed while stocks still do OK (bull market). Stocks can be levitated by central banks and various rounds of corporate stimulus / corporate welfare.

Many corporations don't really need human workers any more. For example, when the oil industry comes back to life, many Albertans will find they still can't find employment. Automation has been on the rise everywhere in the oil & gas business and those jobs are never coming back. But the stocks would do great, in a rebound.

There's a big difference between the stock market and how the average worker is doing. And that shouldn't be news because that's been the story since 2000. It's been a chronically poor economy for the worker, with poor job stability, while stocks have performed great.
 

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Discussion Starter #8 (Edited)
What puts are you buying lonewolf? I've bought three SPY 200 Sept 2020. Thinking about going to 10 puts. Probably small beans for you. Should I be going out longer? higher strike? Lower strike?

IMO, the future of the corona virus, whether it comes back strong or not next winter, is no longer a major factor for markets anymore right now. Whether or not jobs and spending pick up to expected levels when lockdowns are lifted is the huge elephant in the room. Analysts are saying 15-30% of layoff are going to permanent. I think that number is low, and it is based on old (a few weeks ago) layoff numbers, not whatever the peak is (still to come).

The media and government are proven to be excellent at whipping up a frenzy and fear to keep people glued to the TV and to approve of more government spending. It is yet to be seen whether then can do the opposite and whip up enthusiasm for thousehold spending and private sector jobs giving.

The noticeably vocal provincial level and city level governments are going to be a big problem for a "smooth recovery", as varying policies and spending programs of various effectiveness and stupidity are unevenly applied across the economy, causing doubt and chaos, and preventing all the re-hiring that is predicted.
Uncertain @ this time if we are heading down. Though risk/reward says to play as such. When I made money with playing the downside in 1998, 2000 - 2002, 2007 - 2008 & on the recent decline none of the puts I purchased went into the money. If I would have had puts that went deeply into the money I would have made less money except in 2000 -2002. In 2008 I made most of my money & the puts were mostly around the 500 strike for SPX holding Dec 2008 & I think Dec 2009. I lost about 30% of my profit selling into a strong rally on a Monday morning compared to having sold on the close of the down hard Friday before the weekend.

Right now Iam looking to add to short position May 7 to 12 though only going to put on 50% of maximum bet size. There are several ways to play this. Since Iam playing a possible 3rd wave down which would usually be 1.618 times longer then the first wave down in percentage terms as well as faster down. I will be using SPX puts in the 1000 to 500 strike range even though I don't expect the market to get that low. The math 38% x 1.618 = 61% decline from probably the April 29th unless we go higher. I think that worked out to something like 1400 SPX when I did the math. I will be using August, Sept, Nov, Dec 2020 & Dec 2021. I do think the market will probably head lower into 2022 though those puts are to expensive @ the moment & I hold 2, 700 SPX Dec 2022.

Since my puts are so far OTM bid ask spread is wide so will probably let expire worthless if we don't get a good drop. Another possible count is an A wave down from the all time high has completed @ March 23rd low. Wave C is usually equal to wave A or a fib ratio of often .618 times the length of wave A so even if market does not develop into a 3rd wave down I might catch a C wave down.

When I look @ the chart the price pattern says lower, though usually OTM option prices drop more in a wave 2 rally which is my count from the March 23 low & are often cheaper then @ the top. @ the top Dec 2022 1000 strike SPX puts ask was 3 & change. The price is way more now. Which indicates my count is wrong or wave 2 is not over yet. Also the number of bears in this poll has me wondering. Though if we drop 60% here they will probably self sabotage & lose money.

The only time I use OTM is if expecting a big big move.

Trading use @ the money since more liquid.

Buy & hold use deep in the money since most of the price of the option is intrinsic value so option has no choice but move point for point when underlying moves in your direction & as price goes against you premium expands. market goes sideways little time decay. Though start with leaps & exit position @ least 6 months before expiry.
 
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