OptionsDesk broker Alex Mitchell visits the Proactive London studio to speak with Thomas Warner about the increasingly bearish outlook for the UK and to a lesser extent US stock markets, which are suffering from the sputtering post-Covid recovery of the Chinese economy.
Mitchell highlights recent weak PMI and inflation data from China, saying that "the can has been kicked down the road" in terms of the country's economic recovery.
He delves into the market dynamics of both the FTSE 100 and S&P 500, suggesting that the former has shown downward momentum since February, finding some support at around 7220 points. For the latter, the S&P 500 nears trend support at 4325, with potential further downside if breached.
Mitchell emphasises the value of protective put spreads for safeguarding portfolios. Rather than timing the market, these options strategies provide insurance against downside movements.
He goes on to underscore their cost-effectiveness compared to selling positions, which involves fees and potential missed opportunities.