S&P 500 Short Opportunity - State of Complacency

In the beginning of the year, the S&P 500 experience extreme emotional volatility due to the COVIC-19 epidemic. The market rallied based on the quick action from the fed to stimulate the economy by providing liquidity into the market. Based on market psychology, we are seeing the state of complacency. However, we believe the confidence will quickly change as effect stimulus package runs out and we begin to reveal actual economic impact from the virus. The unemployment number for April increased to 22 million and we are getting more announcements on the furlough. With the expectation of ~30% drop in GDP with record level global debt. The chance of v shape recovery is low and we are going to see a market adjustment.

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評論:

Looking back to the chart it was more of a wedge pattern, now it has broken the support line and we are expected to have more downward movement. We are currently holding put option on SPY and call option on UVXY.