Nightly Briefing 6/14/20

Sentiment on Thursday reached extreme levels quickly and ushered in a weak bounce with help from the Plunge Protection Team late in the day Friday. The 200 daily moving average held 2980.

After some projected weakness into Monday, a reactive 1-3 day bounce should unfold. This bounce in our opinion should be used to reduce equity exposure. If you're a long term investor with a buy-and-hold mentality, you need do nothing. But that is not how we trade and issue our trade alerts.

Our objective is maximum alpha and to significantly beat the SPX. And this objective means that sometimes, our prime directive becomes not losing money over making money. Over the next four weeks, the US stock market will be highly frustrating to trade. We are highly confident in this forecast. It will be a short term traders market with very few trending trades. We have two scenarios we are watching. You can apply the paths below to all of the major exchanges.

Scenario #1- The market bounces after Monday and regains the trend line this week, then retracts back to the trend line into June 22-25. Another attempt at the early June high is made sometime in July before a larger drop into August/early September occurs.

Senario #2- The market enters a strong intermediate decline into June 25th to 2600 SPX/23000 Dow and then bounces into the first few days of July.

We get members emailing us asking about the Nasdaq, Russell or Transports but the answer is the same. They will all follow the SPX, which is a blend of everything. Our cycles and data respond best to the SPX so it’s the index we pay most attention to. Day to day the individual exchanges can vary, but when it comes to a strong trending move they all follow one another to varying degrees.

We don’t recommend shorting as the Plunge Protection Team can abort any selloff prematurely if they want to use their ammunition. Our pattern that we discussed for months of a rally into the June Fed meeting occurred exactly as forecasted. We will now see some weakness, but exactly how much remains the question. It will be answered this week.

Use this next spike in the metals complex (sliver, gold, miners) to sell or lighten any short term positions you have. They all follow gold and will not be spared during the coming drop - after which a generational buying opportunity and likely our biggest trade of the year will present itself.

The restaurants are still trading 60% off of their February highs and we believe they will outperform the market going forward. BLMN and DENN’s drop into this coming correction should be supported as institutional money looks to add value. If you’re a long term investor you can sit and do nothing. We will decide in the coming days our path but may look to sell with profit on the coming bounce and time an entry with less downside risk. We are judged on a shorter term horizon by many of our members. Most investors do not posses the mental capital to handle a large temporary drawdown so reducing risk is always our prime directive. We don’t worry about missing a trade as there are endless trading opportunities coming. Remember, Cash is a position and sometimes it's prudent to sit in it. Traders always concerned with having their capital “working" for them do not fare well over the long run.

Shaky markets often trigger large natural gas rallies. In addition, the second half of June into July is a very strong seasonal period for natural gas. UNG should perform well through the coming volatility.

We have several large trending trades planned for the next 2 weeks. Some you know about others we have held close to our vest. They will likely be quick, sharp trending trades. Please make sure you are subscribed to our alerts.


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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. 


By your use of the Site and Services, you're agreeing that you bear responsibility for your own investment research, trades, and investment decisions. Only you can decide whether or not a trade is right for you and you agree to be liable for any trades you initiate at your brokerage using research and/or tools that we provide. If you ignore our advice to do independent research and choose instead to trade solely on information, analysis, alerts or opinions found in our Service or website, you have made a conscious, willing, free, and personal decision to do so. You also agree that HFZ, its directors, its employees, subsidiaries, affiliates, and its agents will not be liable for any investment decision, trade made or action taken by you and others based on news, information, opinion, or any other material published through our Site and Services.  

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