Monday AM Briefing 9/21/20


Dollar seasonality during October prior to the US Presidential elections.


Investors seek safety in cash and US debt prior to elections. For the first time in many months, commercial hedgers are long the USD and increasing positions. When the commercial hedgers go long a significant position in gold or the USD, there is a 90% hit rate for an impending large move up for that asset class.


Normal dollar seasonality during the month of October - a modest bump up.


Sentiment only works at extreme overbought or oversold conditions. We are awaiting a move lower to trigger a loss of faith in gold. The dollar rebound into October should trigger lower prices in silver and gold miners, but gold may see just a modest decline based on safe-haven buying.


Our forecast for a rising dollar and a stock market drop into the end of October is not favorable for miners.


Expect a multi-week correction to continue in gold. 


Gold corrections do most of the damage in 2-3 large down days. September 28-Oct 4 looks very dangerous for gold. It can drop 100 points easily from the rebound top we see into Sept. 28th. We have gotten a few emails of people concerned about missing an October move into the election. Our target of 220 GLD will most likely be struck by the end of 2020 with much higher prices into May 2021. We will remain patient and wait for a break down to a minimum target zone of $1800-$1900 futures to begin alerting options trades and add them to our short term portfolio. A break over $2040 spot will catch our attention and possibly trigger long positions immediately. Gold will be an incredible investment over the coming months and remains a top tier long term investment.


Spx 3220-3260 should contain this first leg down and usher in a bounce back up to 3400+. It is possible we correct into early Tuesday before seeing a reversal into the end of month 9/28-9/30.


We are looking to exit TQQQ with a small profit over the next few days. We are focused on buying after October 4th. It may turn out to be a higher low or lower low, but we certainly expect weakness into that date. A bounce off the 200 DMA would be a tremendous buying opportunity. September 28-October 5th is highly dangerous (a 5%-10% drop is possible in stocks).


Steel should continue to bounce and get some follow through early this week. A daily close over $7.25 should trigger $8+ short term.



HFZ



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