Nightly Briefing 7/21/20

Nightly Briefing 7/21/20


Expect the Nasdaq to still grind higher into month end.


Shown above is the major Chinese stock index. They have their own forms of easing monetary policy and you can see the results: all time highs recently for the Shanghai even with both China being the epicenter of Covid-19 and many of its companies pulling out of the country to manufacture goods elsewhere. The US exchanges SPX and DOW have yet to even regain their previous highs. You can count on them following the same path as the Chinese market.


The average investor is not moving the US markets right now. 'Free money' and easy liquidity for institutions and banks compliments of the Fed are the main ingredients. These entities buy large cap stocks with the best and biggest balance sheets. Small caps are the favorites of some micro cap funds and small investors. Seasonality and bull periods for small caps is generally from March through June. The summer is normally a tough time for small caps as most average investors are taking a break from the stock market and enjoying vacations. We expect small caps to lag and would avoid them for the next 60 days. If you follow our projected market rally periods, stick to the NDX and SPX (SPY and QQQ).


Metals may have topped today. Gold has stiff resistance at $1840 which was attacked today. A violent reversal is coming within days. After a 1-2 day consolidation period, it is possible silver and the gold miners can squeak out a slightly higher high into July 27th. Metals normally spike top in the premarket and get attacked around 8:30am that when the bell rings they are reversing lower and many people have to sell into a falling market. Bottom line, if you are a long term investor, do nothing as higher prices are coming into September. But if you are a trader, sell into a rising market to exit. Don’t worry about picking the exact top. Nobody ever gets it all.

We believe the uptrend line we have shown above in BLMN and DENN will hold as both appreciate into earnings. The large institutions are in charge now and we won't see these names really explode until they are done accumulating and/or covering shorts.


Crude broke out today and may give us a short term top July 24/27th.


Jim Cramer from Mad Money on CNBC touted SPCE last night and you can see the result. We saw a lot of large block sellers today. Most likely an exit for some large players short term. Without meaningful news a reversal should occur and allow SPCE to consolidate back down to $20.

HFZ



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