Nightly Briefing 8/20/20

We expect a pullback to occur in the middle of next week, though the dip buyer should keep markets elevated into September 4th. August 24th is a target for a top in the broad market, $3,440-$3,460. We don’t expect a crash event after Labor Day, but a strong chance of a correction. We do not see any crash event before the election and expect markets to be supported. However, a multi-week pullback is likely from September 29th into October 15th. Remember the market can stay irrational more than you can stay liquid, so do not take this as a signal to short. The plunge protection team can buy a select few stocks and keep the DOW, SPX, and NDX elevated while ignoring the Russell 2000 and other stocks. We will be looking for this divergence. We feel Friday and Monday will be strong days for equities. Look for Washington to announce a compromise on a second round Covid stimulus into the Republican National Convention starting on Monday.

Monday is a major target for us in metals. It could be a top or bottom and we will know shortly. If is a top, look for a sell-off in metals down into September 11th. If it is a bottom, look for a snap-back rally into August 28th-August 31st followed by a decline into September 11th. Our thoughts have not changed. We are headed lower in a sideways churn into early to mid-October in the metals. The next few days' action will clarify our forecast. 

The metals run up in July was triggered by a plunge in the US dollar. When the dollar rises, risk assets like stocks and metals typically follow. With the plunge protection team pumping the stock market with endless QE, the dollar rally has been suppressed, giving the metals strength. When stocks are allowed to correct naturally, the dollar will rise, but with the plunge protection team constantly bringing the market back, as expected, it puts downward pressure on the USD. We currently have an environment where stocks and metals move up and down together - at least for the time being. A daily close over $94 and we have a high confidence of a minimum 2 week bottom in the USD. Watch that key level. A share market consolidation in September and a metals pullback coinciding with a dollar rise would fit together nicely. There should be some good ETF swing positions to add to our short term portfolio in September as this plays out.

We may have had a reversal day in SPCE. Higher prices tomorrow should give us follow through into next week.

BLMN needs to regain its 10DMA tomorrow in order to see higher prices into early next week. Before this uptrend finishes, the 200 DMA should be tagged.

DENN looks stronger technically over BLMN and remains more oversold. It's all about a tag of the 200 DMA for us in these restaurant stocks. We remain patient. Money flows into the sector were strong today.

Today, we may have seen the second backfill of the trend line in this rally leg, and that should be all we need to break out for good. We should see price break through tomorrow into next week’s RNC on Monday. A big move is possible.

A second chance may come before the September breakout into next week for investors to pick up cheap GBTC shares. We would not try to serial trade each and every wiggle. Our AI targets are solid on BTC and we feel higher prices are coming with peaks in September and November. We are in a bull market and surprises are to the upside.


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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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