Nightly Briefing 10/12/20


Small caps lagged today in part due to the short squeeze in the NDX. Small caps tend to outperform toward the end of market moves. The small capitalized stocks go up last. Anytime you see cheap small stocks outperforming the broad market, it can often signal the end of a brief or longer term trend. We look at risk first and gain potential second. The Russell had the longest recent correction of any index and should give us an equal reaction to the upside now. We pointed out 2 weeks back the record short in NDX. These were hedges put on by nervous investors into an uncertain election outcome. The short was large because most investors have the most allocated in the mega-tech names that comprise a significant portion of the NDX. Logic dictated that these hedges would remain in place into the election. With mega-tech companies testifying before congress, the climate has been hostile to NDX investors with a lot of uncertainty as witnessed by the mini NDX crash in early September. A Biden win and big tech would be in big trouble - even more so than President Trump's anti-trust probes. As of last Friday, many of these hedges started to get covered which has boosted the NDX, SPX, and to a lesser extent the DOW. Look for the Russell to play catch-up as other indexes cool off a bit.


New highs are coming for the NDX into November if not prior. We would not sell TNA to buy TQQQ, but if one had spare capital and wanted exposure, we expect new highs in this index over the next few weeks.


Goldman Sachs stated today they expect $30 silver near term due to industrial demand. We should see a strong spike top into early December.


Central banks are trying to suppress the dollar to elevate risk assets. We feel the dollar will grind sideways to up from October 20 - Nov 4th.


We have a break-out in UNG. Price should accelerate now.

We have a break-out in Bitcoin and GBTC. Hold your shares tight.

DENN is starting its next leg up into early next week, $13+.

HFZ

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