With meaningful stimulus coming, I'm swing trading the dips
Updated
Today Trump and Pence seemed to finally get serious about preventing a coronavirus recession, offering a payroll tax cut, a bailout of the cruise line industry, and a promise that coronavirus patients won't have to pay for testing. Admittedly these things are small potatoes compared to the scale of business disruptions that may be coming, but it was meaningful enough to reduce the PredictIt odds of recession in Trump's first term from 61% to 53%.
The cruise line bailout suggests that similar bailouts may be coming for airlines, energy companies, and banks if necessary. Especially as the S&P 500 approaches its ten-year trend line, I am going to be looking at buying any large dips on the theory that additional panic selling will trigger additional panic stimulus from an administration finally waking up to the political risk of an election-year recession. I will not be playing with all of my funds, obviously. This will be risk on the order of 10-20% of my portfolio. (I already made a profit from this strategy today by buying near the mid-day low.)
I wouldn't be surprised to see today's rally continue tomorrow, although the after-market movement in oil isn't promising. But even if tomorrow does turn out to be a green day, the coronavirus fear is growing as the disease spreads in the US. More downside is coming soon. I wouldn't chase today's rally; the SPX is bound to dip back toward that 10-year trend line in coming months as US economic activity continues to grind to a halt.
The cruise line bailout suggests that similar bailouts may be coming for airlines, energy companies, and banks if necessary. Especially as the S&P 500 approaches its ten-year trend line, I am going to be looking at buying any large dips on the theory that additional panic selling will trigger additional panic stimulus from an administration finally waking up to the political risk of an election-year recession. I will not be playing with all of my funds, obviously. This will be risk on the order of 10-20% of my portfolio. (I already made a profit from this strategy today by buying near the mid-day low.)
I wouldn't be surprised to see today's rally continue tomorrow, although the after-market movement in oil isn't promising. But even if tomorrow does turn out to be a green day, the coronavirus fear is growing as the disease spreads in the US. More downside is coming soon. I wouldn't chase today's rally; the SPX is bound to dip back toward that 10-year trend line in coming months as US economic activity continues to grind to a halt.
Note
I took some bites on this market yesterday, because I expected the president to announce meaningful stimulus in order to save the market and his political career. Instead he announced a 30-day travel ban to Europe, ostensibly to stop coronavirus from coming here. Newsflash: it's already here. There goes the money I bet, right up in smoke. XD XD XD
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