Nightly Briefing 9/15/20


Due to no real short interest in the market to buoy declines, markets remain susceptible to mini flash-crash events. Sept 28-Oct 5 is our next window for such an event.

Markets like these are tough to trade and frustrate bulls and bears alike. The blatant intervention by the Plunge Protection Team is not letting the market do what it naturally wants to do - roll over. We suspect this will continue until the close tomorrow after the FOMC policy statement is issued. Unless there is some wild surprise in the statement, we expect the market to roll over Thursday and early Friday for a short term bottom. Most likely, a slightly higher low than last Friday's SPX 3300. The bounce into next week appears limited due to the simple fact the Plunge Protection Team has refused to let markets drop (shown above) to the organic levels they are seeking, SPX 3220. That would have given us an equally powerful slingshot rally back up into the end of next week. Thursday after the close we can forecast price levels for next week, but time targets are September 25 +/-2 days for a top before another round of selling occurs into the first week of October. SPX 3220 and 3110 are the next two levels of support after 3300 breaks. As of now, 3110 should hold all declines into early October and produce a strong pre-election rally into October 21-25.


Expect swings in sentiment and price in September and October to mirror last September and October's decline into an Intermediate cycle low.


Intermediate cycle low - major low that occurs roughly 2 times per year. The best buying opportunities with the least risk and greatest upside occur at these events. A great time for leverage.


Daily cycle low - A profit-taking event every 20-50 days during an intermediate advance. Typically 3-5 of these lows occur in an entire advancing intermediate trend.

We will add a separate terminology section shortly to the gold portal.


We expect the Fed statement to initially drive gold lower only to reverse Thursday for a wild trading day, possibly forming a short term high $1980-$2000 futures. As of now, more weakness off that high into next week is expected. There are many pundits buying miners and gold calling for an immediate breakout of the metals complex based on daily charts. We have shown weekly charts above, which filter out noise and are confirming our October ICL. There remains a possibility for a short term breakout above $2020 futures, but this should be a fake-out move to trap more longs. This is how intermediate tops are formed until the final plunge sometime in October into our ultimate low $1800-$1850. Barring the Federal Reserve announcing a gold standard, we expect more whipsaw to continue into early October before a real plunge occurs.

The dollar can wreck havoc on risk assets tomorrow after the FOMC statement with a breakout over 93.80, which should trigger extension to 95.50. It has been in an uptrend, but suppression by central banks in order to keep stocks elevated into the FOMC meeting has kept a lid on the rally.




We will watch price levels closely to determine if the risk/reward for long trades in biotech and SPX is justified post FOMC on Thursday/Friday. 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. 

 

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