Nightly Briefing 10/1/20

Even though daily technicals are about to give a buy signal, they can quickly reverse and trigger another leg down. We have seen this too frequently to count. If you rely on technical analysis to make money in the stock market, we might suggest a day job. If the markets were as simple as relying on technicals, everyone would be retired on an island. Technicals are a confirmation tool and relevant, but if exclusively relied upon will separate you from your money rather quickly.

We are getting a lot of emails about shorting. We understand why people are attracted to shorting - you make a lot of money very quickly for the simple reason that fear is a stronger emotion than greed. Stocks go down like elevators and go up like escalators. However, the amount of excess liquidity we are seeing overnight is increasing. Someone is hellbent on keeping this market levitated. Can they alter long term trends and change a business cycle? Absolutely not. However, they can prolong a market correction thereby turning it into a mini-crash event by not letting markets naturally breathe and correct. We live in an era of managed markets. We are in buy-the-dip mode into the elections. There is less risk in waiting to see if a correction occurs or just some sideways coiling and then entering long. We are here to protect members and forecast high percentage moves we can act on. We traders who place shorts using our analysis, but they employ excellent risk management and tight stops - very important when trying to catch a spike. Using options to short with the exception of a few special times a year is high risk. We like TQQQ for our long trades into the election. The market should correct hard Friday and into early next week. We will see how much money the Fed wants to throw at the markets to keep them levitating. Bottom line, under SPX 3410 there remains pressure to flash-crash to the 200 DMA, 3120. Over SPX 3430 on a close and our long trade might be triggered.

Gold technicals also look enticing to enter a long trade. Many people have stressed that gold is starting to move up and away from them now. We stand by our word until proven otherwise and favor lower prices into later in the month. If you are anxious, consider a small pilot position in June GLD and or SLV calls at the money. That can represent your buy-and-hold position you never sell. We are going to try to time a low for our members with most likely shorter term call options. A 2 day close over $1924 futures is needed to trigger gold buys. A sharp reversal lower is possible Friday/Monday. If you're hellbent on shorting, stick with metals as you cannot fight the Fed.

The dollar put in a grueling ICL low 30 days ago. A normal bounce/rally is in order and should continue into the election, pressuring risk assets like metals and to a lesser extent stocks.

Oct 21-oct 27 is our topping period for the next UNG cycle. It moves $3-$5 points within days when price accelerates. It can occur at anytime in this volatile, thinly traded commodity. Look for world leaders, including President Trump, to keep energy prices elevated. Many US oil and gas producers lose money with prices under $40. There is a sweet spot for energy pricing in the global economy. Governments will cut production to keep price elevated if necessary.

Dine-in restaurant industry leader, Darden has been on a tear recently. We have rotation with money coming out of expensive inflated sectors and pouring into underpriced sectors. It will happen with Denny's soon.

We have important launches for Virgin Galactic around October 22nd. Expect hype and share price to appreciate into this date. A close back over $20 today is a good sign. If the share market gets hit Friday into early next week and SPCE dips, we would take advantage of it.


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Important Disclosures: Investing in the financial markets can involve considerable risk, including loss of principal. Past performance is not necessarily an indication of future performance.  Actual clients may achieve results materially different from the results portrayed.  All material is for informational and educational purposes only and is not investment advice and is not meant to suggest that any securities are suitable investments for any particular investor.  All information reflects our own actions, beliefs, and processes for purely informational purposes. HEDGE FUND Z LLC IS A FINANCIAL BLOG FOR THE SOLE PURPOSE OF EDUCATION.  HFZ does not represent themselves as acting in the position of an investment advisor or investment manager for funds that are not under their direct control and fiduciary responsibility. 


Third party quotes and information may not be representative of the experience of HFZ customers and do not represent a guarantee of future performance or success. Many of the results displayed on our website were achieved using leverage, such as 2x or 3x leveraged ETF's or equity options 


The information included at HFZ and HFZ writing, research, and updates is prepared for educational purposes and is not a solicitation, or an offer to buy or sell any security or use any particular system.  Information is based on historical research using data believed to be reliable, but there is no guarantee as to its accuracy. HFZ does not represent themselves as acting in the position of an investment adviser or investment manager for funds that are not under their direct control and fiduciary responsibility. HFZ will not provide you with personally tailored advice concerning the nature, potential, value or suitability of any particular security, portfolio or securities, transaction, investment strategy or other matter.  


No information, nor any opinion expressed on the Site or in the Services, shall constitute a solicitation or an offer to buy or sell any securities mentioned therein.  The information presented on the Site and in the Services has been prepared without regard to any particular investor's investment objectives, financial situation, needs, capacity, and trading ability or experience. Accordingly, you should not act on any information on the Site or in the Services without obtaining specific advice from your financial advisors and should not rely on information herein as the basis for your trading and/or investment decisions.  HFZ cannot claim or represent that any of our Services are suitable for you. 


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