Poll: Who is selling today’s (March 2nd) “dead cat bounce “

[chrisaukcam]

Did some buying with some of the mad money in my 401k

 

[Dtail]

I plan to hold off rebalancing until April. I don’t see the market surging to its previous highs any time soon and the risk of another 10-20% decline is imho quite real.
If we don’t have widespread transmission in the USA and Europe is not shut down I think it will be realistic to get back in fully and I am confident it won’t be any higher than prices in mid February.

+1
Looks like just a dead cat bounce yesterday.

 

[audreyh1]

Is the dead cat still bouncing?

I expect we’ll see many of those type bounces after big drop days.

 

[audreyh1]

I think the value “right now” is more in specific companies than the market as a whole.

Agreed!

 

[audreyh1]

+1
Looks like just a dead cat bounce yesterday.

That to me looked like trying to promise the market candy to cheer it up. Are we now in a give me candy or I’m going to have a big tantrum mode?

 

[Dtail]

That to me looked like trying to promise the market candy to cheer it up. Are we now in a give me candy or I’m going to have a big tantrum mode?

Yeah something like that.
2 of the largest upswing % days were in the fall of 2008. This appears similar, although the situation is not as dire as 2008.

 

[BeachOrCity]

Yeah something like that.
2 of the largest upswing % days were in the fall of 2008. This appears similar, although the situation is not as dire as 2008.

As I try to think thru this in terms of longer term risk, I believe corporate debt levels are the biggest issue. Many companies in the US (and world I assume) are very highly leveraged given how good the economy is (cheap rates for debt to buy back stock for example).

The risk is people staying home can kind of have a cascading effect on multiple industries and can these companies service their debt if this goes on for long? Its a question I don't know the answer to, but that IMHO is the longer term risk to the economy and markets.

Its anyones guess, but if we end up like "italy" for example, I think there will be numerous corporate defaults and its wait and see if gov't comes to the rescue.

The only risk avoidance here is to check your bond allocation and move it where there is little to no BBB, and preferably gov't debt. If you haven't already.

 

[audreyh1]

I agree that the high level of corporate debt is a serious concern.

Corporations around the world have begun issuing profit warnings and curbing activities, as more than 96,500 people have been infected by the coronavirus globally and over 3,300 people have died, according to a Reuters tally. The U.S. death toll stands at 11, in Washington state and in California. New York’s governor said on Thursday that 22 people in New York have the virus.

Junk bonds are pricing in a higher level of default and spreads over safer Treasuries have widened to 475 basis points from 403 at the start of February, using the ICE/BofA high yield index. February’s widening was the largest the index has seen since December 2018.

https://www.reuters.com/article/us-...e-credit-as-coronavirus-spreads-idUSKBN20S2U0

 

[pb4uski]

I'll probably sell some in the next day or two to fund topping off a 3.5% CD I bought last year that I found out I can add to as longs as I do so before 4/30. When I first bought it I put in an amount so at the end of the 5 year term it would be at the FDIC limit with interest... I'll now top if up to the FDIC limit and periodically skim off the interest to bring the principal back down to the FDIC limit.

 

[Born2Fish]

I think the value “right now” is more in specific companies than the market as a whole.

That may be so. Wish I was smart enough to know which to buy though.

This latest round of volatility from CoV business impact has made me re-think the individual stock approach. Once the dust settles I'm going to gradually migrate my "hand picked" stock portfolio into low fee ETFs.

(I got kicked pretty hard by oil.)

 

[Dtail]

I'll probably sell some in the next day or two to fund topping off a 3.5% CD I bought last year that I found out I can add to as longs as I do so before 4/30. When I first bought it I put in an amount so at the end of the 5 year term it would be at the FDIC limit with interest... I'll now top if up to the FDIC limit and periodically skim off the interest to bring the principal back down to the FDIC limit.

Yeah, just took my 90K Ally 14 month matured 2.85% CD and moved it to my GTE 5 yr 3.04% CD.

 

[jazz4cash]

Yeah, just took my 90K Ally 14 month matured 2.85% CD and moved it to my GTE 5 yr 3.04% CD.

I like the way you roll! I scraped all the divvies from a batch of 3% IRA CDs and put them in an add-on 3.7%.

 

[BeachOrCity]

I'll probably sell some in the next day or two to fund topping off a 3.5% CD I bought last year that I found out I can add to as longs as I do so before 4/30. When I first bought it I put in an amount so at the end of the 5 year term it would be at the FDIC limit with interest... I'll now top if up to the FDIC limit and periodically skim off the interest to bring the principal back down to the FDIC limit.

I would also encourage people to leave some dry powder for the 'deals' that eventually come up this year.

 

[pb4uski]

Yeah, that's a problem for me... I've very happy with my fixed income positions so I'm not interested in selling any of them and as a result don't have much dry powder available.

 

[BeachOrCity]

What to do w/ my May SPY Puts

So as 'insurance' I bought some May SPY puts at 275 and 290 a while back. They are providing nice ballast to my equities losses. (I did not get in Fermion early, they were out of the money, but not bought when volatility was low)

I am not a trader, so I kept it simple.

The question is when to sell? With today's decline, the market is clearly capitulating to a degree. Right now the premium over the "in the money" amount is $14 and $9 per share of SPY. If the market stays at this level, that $14 and $9 will decline based on time value and volatility value, but still a nice gain.

I guess my question is open ended. I would like the hive minds thoughts on partial selling now, selling all now, or holding for a bit.

My initial thought was the blood in the street and valuation would be clear during earnings season etc in April and I have plenty of time. Now I am seeing this transition to a bit of investor panic and maybe I should pull the trigger?

Time and lower volatility will kill their value to an extent....

So thoughts anyone?

 

[Sunset]

So as 'insurance' I bought some May SPY puts at 275 and 290 a while back. They are providing nice ballast to my equities losses. (I did not get in Fermion early, they were out of the money, but not bought when volatility was low)

I am not a trader, so I kept it simple.

The question is when to sell? With today's decline, the market is clearly capitulating to a degree. Right now the premium over the "in the money" amount is $14 and $9 per share of SPY. If the market stays at this level, that $14 and $9 will decline based on time value and volatility value, but still a nice gain.

I guess my question is open ended. I would like the hive minds thoughts on partial selling now, selling all now, or holding for a bit.

My initial thought was the blood in the street and valuation would be clear during earnings season etc in April and I have plenty of time. Now I am seeing this transition to a bit of investor panic and maybe I should pull the trigger?

Time and lower volatility will kill their value to an extent....

So thoughts anyone?

I'm new to Puts, I literally bought 6 at 230 sp , as I'm cheap and didn't want to risk much.
So my puts were not really a hedge against the stock drop(s), but a learning experience.
I sold 4 of them a week ago, the initial sales were to collect back my investment so the risk was gone.

I had the same thoughts about the time value, like swimming against the current.

 

[BeachOrCity]

The $2T stimulus bill will bring another dead cat bounce. This will present a good Opty to make adjustments but don’t buy into thinking this decline is over.

So I bought a few more puts. This time for July. More insurance. my previous puts were purchased out of the money as insurance for steep decline. These I bought in the money.

Net of it is any decline in the us market at this point is fully insured for me until mid May and marginally until mid July.
All puts are well in the money and will appreciate and counter any further declines.

What if I am wrong? These puts in aggregate cost under 3% of my stocks bonds and cash. Cheap insurance.

 

[Sunset]

The $2T stimulus bill will bring another dead cat bounce. This will present a good Opty to make adjustments but don’t buy into thinking this decline is over.

So I bought a few more puts. This time for July. More insurance. my previous puts were purchased out of the money as insurance for steep decline. These I bought in the money.

.....

Did you buy them on Friday, or on the weekend ?
I always think I can only trade M-F.

 

[BeachOrCity]

Did you buy them on Friday, or on the weekend ?
I always think I can only trade M-F.

Friday during the bounce. Be sure to compare the term premiums for diff maturities. They are expensive so you might want to pay a bit for longer term when short term at the money is already 5% if you decide to do this.

 

[BeachOrCity]

Will this be another "Dead Cat Bounce"?

So whenever the $2T in stimulus gets passed, it seems inevitable that equities will get a lift. The question is: Will it be temporary?

Lets talk math:
The stimulus is $2T most likely
Add in another $2T for the Fed reserve support (they are buying well over that, but its not really direct economic support)
So that is $2T - $4T against a $20T economy.

But we also have debt. $27T in corporate debt (I think). $16T in mortgage and household debt (?). $2T is not enough to save all of this is people stop paying because they aren't working or open.

Thats A LOT. The question is will this amount really save us?

It seems to me the only way the economy can survive a long term shut down is if there is complete forbearance on ALL types of debt. And some type of legislation that eliminates fees and in many cases interest on that debt that was forbearer?

Thoughts?

 

[freedomatlast]

Did anyone catch the news conference last night? Most areas of the country that now have a restriction on businesses operating (probably NYC and some other major cities will be an exception) will be back to work in a week or two, or less. It's not a stretch to think this will have a positive effect on the economy.