I've been waiting for the top of this potential retracement from the initial virus bearish move. The candlesticks from the last 7 days, together with the decreasing volume seem to be good indicators of a bearish continuation.
Other factors would contribute:
- March 2020 US retails sales showed Discretionary sectors posting deep declines
- 15 April FT report "US banks detail dramatic fall in credit card spending" Citigroup reports that Card spending fell by 30% in the last week of March.
- Mortgage defaults are expected to be high and with 1/3 of Americans missing April rent payments. Credit cards or credit card cash loans might become a desperate short term solution but this will only spiral to bad debts
I would have prefered to buy put options but I feel at this point it is super overpriced due to the high implied volatility. Entered the trade with a good 1.53 risk-reward ratio
Other factors would contribute:
- March 2020 US retails sales showed Discretionary sectors posting deep declines
- 15 April FT report "US banks detail dramatic fall in credit card spending" Citigroup reports that Card spending fell by 30% in the last week of March.
- Mortgage defaults are expected to be high and with 1/3 of Americans missing April rent payments. Credit cards or credit card cash loans might become a desperate short term solution but this will only spiral to bad debts
I would have prefered to buy put options but I feel at this point it is super overpriced due to the high implied volatility. Entered the trade with a good 1.53 risk-reward ratio
Trade closed: stop reached:
Hit my stop loss as it went to the last high. This is a lesson for me that the market can remain irrational longer than me