Nightly Briefing 7/19/20


Expect the stock market to stay supported into the July 29th Fed meeting.  A pullback of some size is projected into the first 10 days of August. Our current expectation is for SPX 3000 to hold (SPY 300). An uptrend into early September is then projected. Due to the extra liquidity from the Federal Reserve, corrections post-Covid are fast and furious, lasting just a few days when allowed to occur. Normal corrections are aborted by the Fed injecting excess liquidity and when they finally occur, we get a violent 3-5 day sell off. We expect this trend to continue into the November elections. We expect to buy one of the main indexes after the next correction in early August. The results should be a strong trending trade into Labor Day.


The metals and stock market are now coupled. This correlation is the one we have been waiting to occur. The strongest metals trades occur during this alignment. We expect this relationship to stay this way into 2024. For those not in any metals positions please do not panic - you have not missed anything.  The metals are putting in a top. There is a nice pullback coming the first 10 days of August. We will enter positions there for a large trending trade into fall.

Silver recently turned its yearly trend up. This is very big news for the future of silver. We are now hearing from Fed minutes that projected inflation of 2% is too low and they may move their target up to 3%. This is big news for silver, which tends to explode during inflationary periods of time. Silver will be stronger than gold and the gold miners into May 2021. An ideal entry for us will occur after the next upcoming pullback in early August. We will be entering long term options trades for SLV in the next 3 weeks that we expect to pay exponential returns.


By year end, expect to see excessive sentiment in silver over the red dotted line and prices over $25+ into December.


Shorting in general is difficult in modern markets. The greatest percentage of the declines occur over just a few days. So 90% of the time you are in a losing or a flat trade. That is hard for many human traders to cope with. However, we will attempt another DUST entry when we see confirmation of our predicted downturn. Tops in the metals sector are complex. So if you can handle getting stopped out with potentially a few small losses, you will be rewarded when the dam breaks. DUST could see $30+ on the next pullback.

We expect to see DENN start buying its own stock below market. Hedge funds and pension funds have increased buying into the restaurant sector as they seek limited downside and future yield. Trades like this are very hard to find for institutions.


Earnings are this week on Friday, July 24th, for BLMN. We expect them to beat and provide a better than expected corporate outlook with the wildcard of new business structures and/or franchising opportunity.


We sold CLF because it failed to break through the 200 DMA after 2 days of trading, not a good sign. Secondly, we have a cycle low for the steel sector August 10th. Lastly, earnings are due shortly and this name has a tendency to trade in a volatile fashion into past earnings. We had potential for a quick retest of $7.50 prior, which still may occur. A break above $6.20 may bring us back into this trade. The steel sector will be ignited in the second half of the year on the inflation and infrastructure move. CLF can run fast and hard due to both the huge short position and their double exposure to the steel industry. They produce steel themselves now with the acquisition of AKS steel last year as well as mine the iron ore which they sell to the largest steel companies in the world.

Everyone wants instant profit in the market but that isn’t always possible. Three to four times per year there will be 30-45 day periods of very tough trading with no large trending moves. Bulls and bears can lose money alike during these periods. We have just gone through one from early June into mid-July. Anyone can pull up the largest daily gainers list and say "why wasn’t I in this stock that moved 5 points today?" Four to five months a year these casino stocks will tempt traders with sexy stories and quick potential gains. 95% of them end badly once the music stops and are built on nothing but hype. If the average trader stays with stocks like this, they will lose money in our opinion. There is a reason 99% of all day traders lose money. If you aren't a new member, you watched us anticipate the rebounds in equities late March, April, and May. We are about to enter a three month stretch that is going to be every bit as good as any of those past trading periods. So if you are a new member and getting frustrated from a tiny sample size of relative trading time, we recommend patience.


HFZ





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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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