Nightly Briefing 9/3/20


We warned of increased selling pressure from hedges and shorts placed into and after this weekend as fund managers implement defensive pre-election strategies. Again, not a time to be invested in story stocks. There was no market rescue for the first time in months today - but why? The Fed picks and chooses when, where, and how the market corrects these days. We operate in an era of managed markets. To not recognize this truth is detrimental to one's trading success. The most likely scenario for tomorrow is a to SPX 339 to offer support, followed by a bounce into the weekend. This selling is not an intermediate cycle decline but a shallower daily cycle decline.


Here are a couple ways to help members identify bottoms on corrections like these: First, watch for the 5-day RSI to cross into oversold territory, a 30 or lower reading. Then for the 10 DMA's to turn down. Even though we utilize our AI, it only gives us time - not price - so technicals are important for picking a bottom. We think a temporary bottom will form tomorrow followed by a bounce into late next week and re-test of support during the FOMC week of September 14th. A rally into September 22-25 should ensue. Markets should remain supported until end of quarter window dressing is applied into September 28/29. Afterwards, be prepared for a larger market shock into October 7th, which will be bought back up into October 21st.


Until something changes, we are projecting lower metals complex prices into next week and September 23rd. A bounce during the FOMC week may occur. There could be a spike down in the pre-market followed by a  bounce in gold tomorrow after the non-farm payroll numbers are  reported. $1960 spot should cap all current rallies. Our AI has a possible Labor Day metals market massacre. This doesn’t guarantee it occurs, but markets will be closed Monday unless you trade futures. Sunday night into Tuesday AM may witness a hard sell-off in the metals complex, which then may bounce the rest of the week into the FOMC meeting. Support levels we are watching on futures are $1880 then $1790 toward mid-month. 


Every major breakout will backtest itself at least once. You witnessed this countless times with GDX at $32 and Gld at $1450. BTC broke out of a major consolidation zone trading over $10,500. We have been warning about one pullback coming before it ramps up for a major advance. This is it. If you do not have a position yet, you may want to look at BTC or GBTC. A flush Saturday to $10,350 is possible, but then we expect a $1000 point reversal within a 24-48hr period.

The final wave of an advance is the most powerful. This last move up into September 22nd will have the most energy. $34-$35 is our target. Crude is something you may want to look at adding on weakness into tomorrow.


Steel cycles we have are up into September 22nd. We will try to be patient with X. It held up well today.


DENN also held up well and our timing is still focused on higher prices over the next 7-10 trading days.


SPCE is a volatile stock. Right now we have to endure the negative side of that volatility, but we will be rewarded with the upside soon enough. We expect the rising 200-DMA to hold and offer strong support.


Our plans are to buy the next bottom in stocks in the days ahead as they carve out a DCL, utilizing TQQQ or SPXL. The bounce should be strong. We will most likely wait until Fed week to do so. We are also watching IBB, BIB, and XBI in the biotech sector for a major low in mid-September. We missed the last low in mid-June and the rally, but we will catch this one. More on these trades in Monday’s Briefing. Markets are closed Monday in observation of Labor Day. Our next Nightly Briefing will be Monday evening.

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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