Sunday, May 8, 2022

Market trend has been set

If we read the stock chart upside down, you will find Nov 19 and Jan 24 are two defining points in this stock market advance since Feb 2009. NOv 19 defined the peak of the market. Before one savors his achieving Forbes 100 moment, market has taken the turn and has not looked back. Jan 24 marked the first valley of this retreat, with faked bounces and superceded by another two lower lows before the Wall Street emphatically annouced arrival of the bear market. Why are I so sure this trend is here to stay. As with any other decline in the market, evetually market would return to its previous highs, but not every stock. And not with a definitive pattern or schedule. The trend began even back in October 2020. For the entire year of 2021, especially the second half, the bluechip non-techs outperformed tech stocks. The high flyers crashed down in March of 2021, the representive of which is ARKK. With investors lackluster interests in small tech, one would relate that to the 1999-2000 stock market reversal. When blue chip outperforms tech, the run to safety is inevitable. Like the ever-rising market from 2009 to 2021 filled with sporadically surprsing large drops, the ever-declining market also could have bounce-backs. But the trend is set. It is set because of high interest rate, inflation rate, max employment rate, and a red-hot housing market. So what to do. Fortunately I did take lesson from 2000s - starting holding large position of cash in January. But that is not enough, especially in a high interest enviornment. A portion needs to be in CD or fixed rate, and a portion needs to buy put options in order to profit from the stock market decline. What are ideal put to buy. ARKK is a desired stock as I can even see it gets dissolved this year. Another one is put on QQQ. Or on IWM. Market indices is probably a better way but gain could be limited.