Nightly Briefing 9/14/20


At the moment, everything is tied to currencies - namely the US dollar and Euro. The dollar is being suppressed to keep stocks elevated into the Fed meeting. It tries to rally and keeps getting knocked back down. Most likely after the Fed meeting, Wednesday 2pm est., it will break through the 93.80 level and unleash a strong rally which will be the catalyst that applies pressure to metals and stocks into early October. The past 3 months, this relationship has dictated price levels in metals, stocks, and currencies. We will watch it until the pattern breaks. We have a strong AI target for the US dollar in October, which appears to be a top in the making at the 97 level (200 Dma), and a low for the metals complex as we indicated in our market snap shot in the gold portal. We will watch for the US dollar to break out post-FOMC on Wednesday.

The Euro and metals move together. The Euro has been propped up, even though it's been in a daily down trend, and unable to drop. It moves inversely to the dollar and we are looking for a sharp drop in the Euro post FOMC. 


The bullion banks have not dumped a large amount of futures contracts in the market since June. They have not gone away, but are more selective regarding when and where they launch their market attacks. Many buyers of metals on the Comex have increasingly demanded physical delivery of all gold purchases. We all know paper gold is the means by which the bullion banks manufacture selling pressure with deep cash reserves, pushing the market around so they can make money virtually risk free. However, since the advent of this new bull market in gold and silver, the game has changed. One must keep their guard up as we expect an attack in the near term, ($40-$70 drop in gold). It may occur post FOMC into Sept 25th. They are still net short billions in gold - some unhedged - so we expect to see some type of assault on price in the next few days. They will attempt to keep price below the downtrend line. No breakout should occur in gold between now and November 1st. It should whipsaw back and forth between $1800-$2020 futures, frustrating both bulls and bears. The next launch date should occur at the end of October for a multi-month rally into February, $2300+ gold, $36+ silver. We wont miss it. Bullion banks may attempt to trap longs on Thursday after the FOMC by quickly spiking gold, getting fresh new buyers, then dumping contracts. These new buyers will be trapped and quickly realize they made a mistake, and this will be the fuel for the next decent drop with some help from the bullion banks of course.


The intervention in the stock markets is so blatant at this point that Jerome Powell's money printer has become something of comedic legend on Wall Street. Late Friday witnessed a massive intervention when the Plunge Protection Team reversed the sell-off into the Fed meeting. And last night, when the futures markets opened at 6pm we saw incredible E-mini SPX contract purchases mysteriously bidding up the Dow Jones +300 points by midnight. Knowing how the Fed thinks and understanding what is important to them is as important as our AI and trading system. Bottom line, if the Fed has declining markets into a Fed meeting, it has more pressure to expend capital and ammunition making policy-altering statements. They run a business and always wish to save their bullets for a rainy day. We should see consolidation into Thursday and early Friday AM. Markets should go sideways into Wednesday’s Fed statement, and we will see if they have any more power to push Wednesday to a green close. The selling pressure is intense right now and there is potential for Thursday to be a big down day. Remember early June's Fed meeting? Up big Monday succeeded by a slow descent turned bloodbath the day after the Fed meeting. It is possible this pattern plays out. Shorting is not wise as they can abort any sell-off if they want to spend the money via corporate bond buying and US treasury purchases. That liquidity in turn always and mysteriously seems to find its way into the stock market. A bounce out of the Thursday low looks probable. How much of a bounce and to what targets? We will know by the levels we drop to on Thursday. 



It is all about the end of quarter for our institutional holders of DENN. We think they will help our position with some buying into month end. Still trading below 50% of pre-covid levels with plenty of cash.


Bitcoin is building its next base to launch from. We are highly confident of our November targets for Bitcoin. It is impossible to know when it will take off. It can surprise to the upside any day and the risk of being out of the market trying to cherry pick a low is not wise. At this point, a core position must be maintained. The surprises will be to the upside in GBTC and BTC.


SPCE gave us a close over the 10 Dma, the first good step in mounting a sustained rally.


Do not chase biotech yet. We realize it most likely bottomed on Friday. We had the 11th or 14th as a low, but did not expect a rocket launch in price from the low. Biotech often bottoms ahead of the stock market. There is a gap in BIB, XBI and BIB that can be filled Thursday. Stay tuned for a better entry.

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.  

 

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