Short

Updated

This is just the beginning of the big downturn

Yesterday the inflation data came out and as I expected it was very bad. I think that inflation will continue to grow throughout the rest of 2022, and the first rate cuts will be discussed only at the beginning of 2024. It's no secret that there will be several more interest rate hikes and that high interest rates will remain for the entire current and next year. Will stocks or crypto grow in such conditions? I highly doubt it. So my idea remains the same: short NASDAQ and CRYPTO (the most rate-sensitive assets). The 4 charts below confirm that there's still a lot of room for the stock market to fall and interest rates to rise:

DOW:

NASDAQ:

CRYPTO:

US10Y:

Note

Bingo! The FED has said that they will continue to raise the rates further (including in 2023), and that they wouldn't lower the rates until 2024. So that means only one thing - the bear market will be very long this time. I also think that in this year and 2 months S&P 500 will fall to the level of 2400-2500, the DOW will return to 20K once again, and the NASDAQ will most likely fall to 6000-8000. But the saddest thing will be for the crypto holders: there I expect the price to return to the very lows of 2020 (100 billion total market cap). As for the US10Y, I don't expect a yield higher than 5.5-6%.

Note

I also think that the market will not go up in the next 3-5 years. It might take too long to deal with the consequences and even more companies will have serious problems (especially NVIDIA, AMD, Adobe, Accenture and almost 70% of the NASDAQ stocks). Some companies will disappear altogether or be taken over. So the best investment for the next couple of years is to buy puts and short crypto. I won't be surprised if the bear market lasts 5 years or even more

Note

Temporary rebound, nothing more than closing shorts on positive news. I would recommend using this to buy puts either on the NASDAQ itself, or on weak companies from it (NVIDIA, Adobe, MetaPlatforms, Netflix). The last two companies have a very high chance that all their future reports will be negative and the price will only fall. Don't expect S&P 500 above 4000-4200 even in 2023.

Note

Breaking through 3500 on S&P, expecting 3000-3200 this year and 2400-2800 next year. The Fed will most likely raise the rate 2-3 more times by 0.5-0.75, so the rate in 2023 will be too high. As I said earlier, buying puts and short crypto is the only profitable strategy for the next year and a half. As well as being able to lock in good bond yields, 5-6% is already very good.

Note

US10Y is almost 4.3 and there's no doubt that we'll reach 5% very soon. Potentially, we can reach 5.5-6 next year and stay there for some time. So I continue to believe that the stock market will fall by at least another 20-25% over the next 6-8 months, and crypto by all 40-50%.
My Current Positions (% of portfolio):
QQQ (12%): Short stocks (avg. $310, TP $175, SL $350)
Bitcoin (10%): Short futures (avg. $23,758, TP $12,500, SL $27,500)
SPY (8%): Short stock+monthly buy puts (avg. $405, TP $290, SL $450)
NVDA (8%): Short stocks (avg. $141, TP 1 - $100, TP 2 - $75, SL $150)
ADBE (7%): Short stocks (avg. $427, TP $200, SL $500)
META (5%): Buy Put Options (november), strike price $105
AMD (5%): Short stocks: (avg. $55, TP $10, SL $70)
ACN (4%): Short stocks (avg. $272, TP $170, SL $300)
Ethereum (4%): Short futures (avg. $1,715, TP $800, SL $2,200)

Note

Completely closed my position on Meta with a huge profit.
Added DIS (2%): Buy stocks (avg. $101, TP $150, SL $85)

Note

Bought more puts on SPY (monthly, december 2022) at the close. Position increased from 8% to 10%. Strike Price @ $350.

Note

Yesterday we had some very interesting data. This data shows that the labor market is still very hot and that the Fed is unlikely to change its current position (fight inflation, raise interest rates). No matter how the market reacts today (sharply down or sharply up, and then down over time), there are no reasons to be bullish. At all. My guess for the next rate hikes will be 0.75 basis points, then 0.50 and then 1 or 2 times 0.25. Under such conditions, NASDAQ and CRYPTO will fall for at least another year or so. Today I might increase my QQQ short position by buying December Puts with a strike price of $240.

Note

Bought december puts on QQQ, strike price $225. Position size changed from 12% to 16%

Trade closed manually

I completely eliminated the position on Disney. The company's ER was kinda bad, so I chose to close the position manually at a price of $88. Today we also have CPI data, which is likely to once again show that inflation isn't slowing down or not falling as much as everyone thought. This will lead to a further, even more serious fall in all markets (especially crypto, where BTC can drop to 10K within a couple of months and ETH is most likely will be below $800). Nevertheless, I don't plan to increase any of my positions just yet.

Trade closed: stop reached

Closed my short positions on NVDA and AMD. I don’t know why we had such a rally in semis, but it is what it is. However, I'm still bearish on QQQ/Crypto. Yes, inflation is slowing down a bit, but it's still very high. The main problem right now is that the interest rates will still be high for most of 2023, so I think this is a very short term rally. The only positive thing is that the rates is now unlikely to be raised higher than necessary (above 5-6%). I could also say a few words about the crypto and FTX situation in general, but I think everyone saw the news anyway.

Note

Closed FB (stop reached), shorted more QQQ/BTC/SPY (15%, 12%, 10%). I don't think that we'll go up anytime soon

Heist_FlyZ

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