By now we should have all positioned our portfolios defensively and be sure that in doing so by covering we are ensuring that our opponent will not try a steam roller!
Think back to the diagram and follow the flows....
We have a typical position here in which French Equities can be sold actively. Thanks to the economic slowdown, covid and election risk, we can quickly bring about the attack of our targets. Sellers have already completed the difficult part of the move, but we must not go to sleep on the job!
For the sake of the discussions here, encourage all those who are trading the moves down in equities to start sharing their charts and views in the comments and we can further the conversation and developments.
While I agree with your analysis and the fact we are entering a recession, I don't share your views about the timeline, as in my opinion the retracement will be much slower, for a few reasons:
- March big drop was due to the "novelty" of the covid that shaked the market. Round 2 is more predictable and will sank the market too, however much slower, as market catch up with grim economical data.
- Oil production is much lower, so we won't have an oil crisis of such magnitude
- elections won't play that much of a huge role. Stimulus does however, and if dems are elected, it will be stimilus Bonanza (in a "normal year", dems election = stock market down for a bit)
In my opinion, it's gonna retrace, but it will take 1 or 2 full quarters to see the lows.
What do you think about it?