Looks like I will open for trade tomorrow FUCKED — since I have a 5% position in DO and she just filed for bankruptcy. WLL filed for bankruptcy and is up 350% since then; but usually a filing is met with some initial selling before the details are hashed out. It seems to me, this bankruptcy might be the one to open the floodgates to a tsunami of filings in the weeks to come — rendering the oil patch uninvestable.
With bankruptcies, you will see credit downgrades and mark downs at banks. We are still trading in fantasy land and I expect traders to buy dips until reality starts to seep in.
When should that happen?
About a month after the global economy re-opens we should start to get some estimates for revenues and earnings. Without imposing my bias, I think it’s fair to say the balance of 2020 will be decided by the after-shocks of COVID-19 and if it re-emerges following the end of quarantine. The next drop will be large and catch many by surprise.
Presently, we are -35 NASDAQS now and crude is stable at $16.55. I read a note by Goldman today which predicted another rout in WTI futures, possibly under $0. I also read that Banks of China clients took more than a $1b hit on the negative $37 WTI drama of two weeks ago.
Whatever happens tomorrow, I enter the day at 65% cash, which provides me with a lot go options — should I need to average down and implement a Martingale Stratagem to escape a poorly placed trade. I suspect markets will want to trade higher, but will eventually sink into the pits of hell. I closed out my shorts Friday because of the collapse in the VIX, suggestive that investors are normalizing. This of course means the next crash will catch many off-guard again. I of course do not know when it will happen, only that is will happen some time in 2020.If you enjoy the content at iBankCoin, please follow us on Twitter