Nightly Briefing 9/28/20


We have a target for a top on Wednesday at SPX 3410. The pullback we expect to occur should keep SPX above the low of its prior daily cycle decline of 3200. We want to see that low hold and go long in our time band for a rally into October 21-25. If for some reason we dip below 3200, we will reassess. A slight undercut of 3170 may be possible. Shorting after Wednesday would be for aggressive traders only with no options and tight stops in SPXS or short SPXL. Shorting the Fed’s liquidity bazooka is a tough proposition. The two big down days currently appear to be Friday and next Monday. NDX is by far the strongest index.


The USD stalled at the downtrend line and provided a pullback, which allowed metals to rebound and stocks to surge. Stocks can rally through a rising dollar with the help of the Fed, but 95% of the time metals will struggle. We are looking for a dollar top near the election.


The dollar has bottomed and sentiment has a long way to go before price is overbought. We expect the 200 DMA to be tested prior to the election. This will pressure metals and limit stock gains after mid-October.


We have received a few emails asking why we don’t short gold. Metals spike down for a day with the help of bullion bank pressure, but dip buyers quickly rally them back. Often these spikes occur in premarket and aftermarket trading, making it challenging for the average retail trader to harvest gains. The only time in a metals bull market that you will see them embed in oversold conditions is during an Intermediate cycle low, where price will embed into oversold for a period of 3-7 days and create a bloodbath phase where longs panic out and commercial traders and banks enter into large positions. This is when and how the large players enter positions. They would constantly inflate markets if they tried to build positions during most trading days. The metals markets are fairly thin. We expect to see this occur in late October. 


We have stated since we entered Virgin Galactic that we expected October to be a huge month for the stock based on news flow and corporate developments. Two major banks upgraded the stock today and we expect more to follow. SPCE has the potential to be the story stock of 2021. October/November is a target top followed by February as the company executes its business plan. They have diluted already to raise capital so that risk is out of the market. We expect $27 to be tested shortly. We plan on holding at a minimum into November or $40+, whichever comes first.


CLF is in talks to purchase MT’s US steel assets, expanding its US footprint in the rolled steel market. Our concern is investment bankers push the stock quickly to $8+ by Wednesday and then announce the deal. A combination of senior notes and some stock would comprise the capital raise and damage price in the short term. However, with the increase in revenue and EPS long term looks huge for CLF. We will watch the trading action closely and most likely be cautious and exit over the next 48 hours unless there are additional developments.


SPCE had a recognition day today gapping up $3+ points at the open and closing over short term resistance. You had to be positioned prior, which will likely be the same scenario with BTC. You will wake up one morning and find price up $2500 in BTC and be forced to chase if you don’t have a position. November is going to be exceptional for BTC.



UNG should have one more day of consolidation. You can see a flag forming on the short term chart and this should result in price following our forecast into mid-October.



HFZ




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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 

 

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