TRACKRECORD DAILY
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TRACKRECORD DAILY

Weak Shorts Under Threats

Bears who got excited at the lows will likely be perplexed and frustrated yet again given the strength in the market. Another 1–2% grind higher in the Nasdaq index will likely be triggering some stop-losses of those who got short at bad levels last week.

Tech stocks continue to lead the way higher on a no news day. With no data releases or significant headlines to drive the market, the price action suggests that all the weak longs have bailed in the panicky sell-off of recent weeks. Price action in the precious market is also looking much more positive.

Bears who got excited at the lows will likely be perplexed and frustrated yet again given the strength in the market. Another 1–2% grind higher in the Nasdaq index will likely be triggering some stop-losses of those who got short at bad levels last week.

TRADING PLAN

  1. Gold & Silver — Support for Gold is at 1850–60 is holding for now. Support for silver is at 21.80–90. With weak longs washed out, the grind higher seems to be resuming. Keep to the path.

Key risks — US equity market weakness, and USD yields going higher with strong USD. Risks previously highlighted remain on the horizon and may cause volatility spikes in the days ahead.

WHAT HAPPENED YESTERDAY

Market Movements as of New York Close 28 Sep 2020
  • Dollar retreated from a two-month high against a basket of currencies on Monday as equities rallied after four straight weeks of declines ahead of a busy week of economic data and political developments in the United States. FX was relatively orderly as most of the action was driven by the rally in the US stocks.
  • S&P 500 rose 1.6% on Monday in a broad-based advance. The small-cap Russell 2000 (+2.4%) and S&P MidCap 400 (+2.4%) outperformed with 2.4% gains, followed by the Nasdaq Composite (+1.9%) and Dow Jones Industrial Average (+1.5%).
  • All 11 sectors within the S&P 500 ended the day in positive territory, with energy (+2.3%), financials (+2.3%), consumer discretionary (+2.2%), and information technology (+1.9%) finishing atop the standings. The utilities sector (+0.3%) was today’s laggard.

HEADLINES:

PELOSI SAYS DEMOCRATS UNVEIL NEW COVID-19 AID BILL

U.S. House of Representatives Speaker Nancy Pelosi said on Monday that Democratic lawmakers unveiled a new, $2.2 trillion coronavirus relief bill, which she said was a compromise measure that reduces the costs of the economic aid.

In a letter to Democratic lawmakers released by Pelosi’s office, she said the legislation “includes new funding needed to avert catastrophe for schools, small businesses, restaurants, performance spaces, airline workers and others.”

The new proposal included $436 billion for state and local governments, as well as money for education, testing, airline industry workers and for a small business loan program known as the Paycheck Protection Program, a statement from House Democrats said.

It would also provide a new round of direct payments to Americans of $1,200 per taxpayer and restore federal unemployment benefits of $600 a week through January.

Thematic Context: “Either Congress passes the bill, or the markets will force it out of their hands via a selloff. We maintain that any meaningful retracements (approx -10%) in Nasdaq can be bought.” — 9th Aug 2020

“As stimulus effects wane off due to the lack of motivation to expand the balance sheet at this point in time, mainstreet economic woes floats back to the forefront. In our opinion, nothing has changed on mainstreet, jobless rates have been as high during the risk rally as it is now, but without the wealth creation effect in markets, problems suddenly seem bigger. As we have been saying, either the government prints the money, or it will be forced out of their hands via magnification of social and economic woes.” — 24th Sep 2020

BIDEN CAMPAIGN TEES UP TRUMP TAX ISSUE ON EVE OF FIRST DEBATE

Joe Biden’s campaign seized on a fresh line of attack on the eve of the Democratic presidential nominee’s first debate with Trump, accusing the Republican incumbent of gaming the system to avoid paying his fair share of taxes.

Trump, a self-proclaimed billionaire who is seeking reelection in the Nov. 3 vote, paid only $750 in federal income taxes in both 2016 and 2017, after years of reporting heavy losses from his businesses to offset hundreds of millions of dollars in income, the New York Times reported on Sunday, citing tax-return data.

The Times also reported that Trump paid no federal income tax in 10 of the previous 15 years through 2017, despite receiving $427.4 million through 2018 from his reality television program and other endorsement and licensing deals.

Trump and Biden will square off in their first debate in Cleveland, Ohio, on Tuesday, five weeks before the election. Polls show Biden leading Trump nationally and in a number of key battleground states.

“I am looking very forward to the debate,” Trump told reporters at the White House on Monday.

SUPREME COURT NOMINEE BARRETT PREPARES FOR MEETINGS THIS WEEK ON CAPITOL HILL

Trump’s nominee to the U.S. Supreme Court, Amy Coney Barrett, will begin meeting with senators this week as Republicans push ahead with a rapid Senate confirmation process ahead of November’s presidential election over the objections of Democrats.

Trump on Saturday announced Barrett, 48, as his selection to succeed liberal Justice Ruth Bader Ginsburg, who died on Sept. 18 at age 87. Barrett, who would be the fifth woman to serve on the high court, said she would be a justice in the mold of the late staunch conservative Antonin Scalia.

Her confirmation by the Senate would result in a 6–3 conservative majority on the court.

Republicans hold a 53–47 advantage in the Senate and are aiming to hold a vote before the Nov. 3 election, in accordance with Trump’s wishes.

Trump, who is running for a second term against Democrat Joe Biden, has said he wants nine justices on the court so that it will have a full complement to tackle any election-related legal issues and possibly decide the outcome in his favor.

Thematic Context: “Scalia, who died in 2016, was one of the most influential conservative justices in recent history. Barrett previously served as a clerk for Scalia on the high court and described him as her mentor, citing his “incalculable influence” on her life.

“His judicial philosophy is mine too: a judge must apply the law as written. Judges are not policymakers,” Barrett said.

On the court, Scalia voted to curb abortion rights, dissented when the court legalized gay marriage — he called it a “judicial putsch” — and backed broad gun rights, among other positions.” — 28th Sep 2020

DAY AHEAD

Trump vs Biden

Trump and former Vice President Joe Biden square off on Tuesday in their first presidential debate. With five weeks to go until the Nov. 3 general election, the stakes are high. More on this in market musings below.

SENTIMENT

FX

STOCK INDICES

Market Musings

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