Betting against QQQ has been suicide since its insane rebound from the March lows.
FANGMAN stocks are holding up pretty much the equity market right now, and demand is through the roof: they are in every fund manager portfolio, the Swiss National Bank is purchasing them as a price insensitive buyer and the recent earnings releases have done much to assuage investors' fears about their immunity from the COVID-19 induced depression.
And yet, I think like many that investors have switched from panic to euphoria too fast.
This rally has been slowing down quite significantly in the last week or so, with IWM filling the gap with QQQ. You could argue that breadth is increasing, or that the leaders of the rebound are slowing down
The FANGs are at all time high already, purely based on the 'don't fight the Fed' mantra. Fighting the Fed has never paid off, but following the Fed blindly with repos has led investors to the March trap.
Without guidance and many uncertainties described but ignored by investors, does it make sense for them to continue rising at this blistering pace?
My scenario assumes that after QQQ has filled the end of February gap (still 2-3% up), if there is a strong rejection we could see in the summer months a slow decline (death by a thousand cuts), triggering a more precipitous decline in case Presidential polling favors a Democrat conquering the Presidency.
If this pans out, a long term QQQ bear put spread could be a relatively cheap way to play this.
FANGMAN stocks are holding up pretty much the equity market right now, and demand is through the roof: they are in every fund manager portfolio, the Swiss National Bank is purchasing them as a price insensitive buyer and the recent earnings releases have done much to assuage investors' fears about their immunity from the COVID-19 induced depression.
And yet, I think like many that investors have switched from panic to euphoria too fast.
This rally has been slowing down quite significantly in the last week or so, with IWM filling the gap with QQQ. You could argue that breadth is increasing, or that the leaders of the rebound are slowing down
The FANGs are at all time high already, purely based on the 'don't fight the Fed' mantra. Fighting the Fed has never paid off, but following the Fed blindly with repos has led investors to the March trap.
Without guidance and many uncertainties described but ignored by investors, does it make sense for them to continue rising at this blistering pace?
My scenario assumes that after QQQ has filled the end of February gap (still 2-3% up), if there is a strong rejection we could see in the summer months a slow decline (death by a thousand cuts), triggering a more precipitous decline in case Presidential polling favors a Democrat conquering the Presidency.
If this pans out, a long term QQQ bear put spread could be a relatively cheap way to play this.