After having closed our first short on the S&P500 last week at 2715, we close our second leg as the S&P500 has reached a strong support at 2600. 2600 corresponds more or less exactly to Jan-Feb pattern. We have many extreme contrarian buying signals justifying to close this hedge.
However, what has changed this time is that the bullish trend is broken, so statiscally, “buy on dips” do not work as well as in bull market. This is why we keep our convexity exposure (long put 2500 June 2019) in case of bigger correction.
Tactically, tomorrow is the end of the month and asset managers have to adjust their allocation by buying equities to keep a fixed weight.