Cabrera: Daily Trading Plan

Tuesday September 22, 2020                                                        Trading
Desk: (312) 236-8907

TODAY’S GAME PLAN:  from
the trading desk, this is not research

DATA/HEADLINES: 
10:00ET  Existing Home Sales, Fed’s Evans speaks; 10:30ET Fed Chair Powell testifies on CARES Act; 12:00ET Fed’s Barkin speaks; 1:00ET $52 billion 2-year note auction; 3:00ET Fed’s Bostic speaks

Powell appears before the House Select Subcommittee on the coronavirus to discuss the central bank’s response.

TODAY’S HIGHLIGHTS:

• U.K. Recommends Work From Home with the government set to announce new restrictions on bars and restaurants
• Senate Republicans are moving quickly to set their strategy for confirming President Trump’s Supreme Court nominee
• China’s Xi Swipes at U.S. for Acting Like ‘Boss of the World’
• Infections are still rising in 68 countries
  
  link
• Rank-and-file union members snub Biden for Trump
  
  link
• Big financial firms ready to scrap Libor, Moody’s says; 3-MONTH DOLLAR LIBOR FALLS TO LOWEST ON RECORD
• Deutsche Bank to close 20% of domestic branches in Germany
• U.K. Prime Minister
  Boris Johnson says new coronavirus restrictions on hospitality, sporting events and social contact are likely to be in place for 6 months

Global investors have been struggling to price in a dimmer outlook for further U.S. fiscal stimulus, rising Covid-19 cases in several nations
and predictions of market volatility around the presidential election. Globally, there was a mixed picture of case growth as some recent hotspots showed signs of cooling. U.S.-China tensions are also simmering, with doubts emerging over whether Oracle Corp.’s
deal with TikTok will win U.S. and Chinese government assent. With COVID-19 cases rising rapidly in the UK, Prime Minister Boris Johnson is set to announce fresh restrictions that includes closing of pubs, bars, restaurants and other hospitality venues across
England. At around 7:55ET U.K. Prime Minister Boris Johnson said new coronavirus restrictions on hospitality, sporting events and social contact are likely to be in place for 6 months, weighing on equities.

EQUITIES:

Futures tracking the S&P 500 and Nasdaq indexes bounced, with beaten-down shares of technology-related companies leading early gains, while Dow
futures were subdued on uncertainty over more U.S. fiscal stimulus. S&P 500 and Nasdaq futures contracts reversed early overnight declines, after the
E-Mini S&P reached a 10% pullback from the early September all-time high. Nike and Aurora Cannabis are among the companies reporting results.

December E-mini S&P futures -0.1%,
Nasdaq +0.2%, Russell 2000 futures -0.25%, Dow futures -0.25%. The settle below the
50dma
was technically negative and we have the
100dma
around 3187 as next key support.

Small caps underperformed yesterday with IWM falling 3.4% vs SPY -1% as the 200dma in the pair continues to be key resistance. Look for the 200dma
in IWM around 145.33 to be short term pivotal support.

Big tech may be able to get a bounce here after FAANG+MSFT hit the initial key Fibonacci retracement support. NYSE FANG+ Index holding the 50dma
is a short term positive.

European stocks bounced after a sell-off in the previous session, as technology, autos and energy stocks gained, but worries about new coronavirus
restrictions in Britain and elsewhere kept travel stocks under pressure.  Germany’s HDE retail association said on Tuesday it expected nominal sales to grow by 1.5% this year despite the coronavirus pandemic, a sharp upward revision from its previous estimate
for a 4% drop. ASM International, a producer of chip-making equipment, and Germany’s United Internet AG led increases in the Stoxx Europe 600 Index, which snapped a three-day slide. Oil and Gas sector +1.3%, Autos +1.2%, Telecom +0.75%, FTSE 100 +0.25%, DAX
+0.7%

Asian stocks fell, led by energy and materials. The decline in financial shares continued in Asia, following a report about suspicious worldwide
banking transactions. India posted the lowest daily COVID case increase in two weeks. Indian shares fell nearly 1% however as concerns of a second wave of coronavirus cases and fears of fresh lockdowns in Europe, weighed on domestic investor sentiment. South
Korean stocks led a slide in emerging Asian markets, shedding more than 2% to touch a one-month low, as investors dumped riskier assets after fresh COVID-19 outbreaks in Europe hit hopes for a speedy global recovery. Jakarta’s stock index fell 1.3% after the
country’s finance minister forecast a steeper economic contraction this year than earlier predicted. The Shanghai Composite Index also retreated 1.3%, as China stock shorts soar to record highs. China said it will step up financial support for its supply chains.

FIXED INCOME:

Treasuries steadied before Fed Chair Powell and Treasury Secretary Mnuchin speak later in the day at a Congressional panel. Treasuries are edging
lower as U.S. trading gets underway with 10-year yields around 0.68%. Auction cycle comprises $52b 2-year note, $53b 5-year note Wednesday and $50b 7-year Thursday. IG credit issuance slate includes AIIB $3b 3-year; at least seven issuers postponed offerings
Monday amid risk-asset selloff.

METALS:

Gold steadied as the dollar reversed early gains overnight after gold exchange-traded funds saw significant inflows as the price drop triggered
investor demand. Focus today will turn to U.S. Federal Reserve Chair Jerome Powell’s appearance at a congressional committee. Powell’s appearance on Capitol Hill this week will address lawmakers’ questions about the raft of emergency measures the central bank
has taken to cushion the blow to the economy from the pandemic.

ENERGY:

Oil prices rose as analysts took the view renewed lockdown restrictions would have only a limited impact on fuel demand, partly reversing a steep
drop in prices yesterday. Brent futures were up 1.3% near $42 a barrel, snapping a sharp decline Monday alongside European markets. There are also ongoing concerns about the health of the diesel market. In both Asia and Europe, the profit from making the fuel
is now lower than it was in the depths of the first wave of the pandemic. Weak refining margins limit the incentive for refiners to keep processing more crude oil. Tropical Storm Beta, meanwhile, is bringing flooding to Texas and is set to hammer Louisiana
but isn’t expected to cause many issues for onshore refineries. 

Both, WTI and Brent held key Fibonacci support around the .382 retracement. Using the 50 day and 200 day moving averages as pivotal resistance.

Front month Nat Gas futures fell nearly 35% from the late August high after failing at the 200 week moving average. 1.780 area should prove to
be key Fibonacci support in the short term.

CURRENCIES:

The dollar is reversing early overnight gains. The pound fell as the government tightened restrictions, before reversing losses after holding
its 200dma support as the BOE governor said work on negative rates would take time. BOE governor Bailey said the latest policy statement did not imply it would necessarily use negative interest rates, and that observers should not read too much into it.

TECHNICAL LEVELS:
(futures)    

Colors within the report:
Green
is always the 200 period (day, week). Red is always 21,
Blue = 50,
Brown =
100  *Stars have added importance

Equity movers in early trading, as of 7:35am ET:

Advancers

• GME +19% (+$1.66); Gamestop Holder RC Ventures Has Talked With Executives, Board
• SAVA +14.6% (+$1.43); Cassava Sciences Gains After Board Member Robertson Buys Shares
• GNCA +10.3% (+$0.24)
• FLGT +9.2% (+$3.44)
• HGEN +7.1% (+$0.79)
• VRM +6.6% (+$3.07); Carvana, Vroom Upgraded at Goldman on Shift to Online Buying
• QTT +6.2% (+$0.15); Qutoutiao 2Q Cash And Cash Equivalents 160.4 Mln Yuan
• XERS +4.7% (+$0.31)
• AZO +4.6% (+$54.0); AutoZone Fourth Quarter Comparable Sales Beat Estimates
• NTNX +4% (+$0.86)
• MTDR +3.6% (+$0.31); Matador Resources Raised to Buy at Truist Secs; PT $15
• AVDL +3.6% (+$0.22)
• YNDX +3% (+$1.75)
• ACI +2.9% (+$0.40)
• SNOW +2.8% (+$6.40)
• U +2.8% (+$2.04)

Decliners

• NKLA -2% (-$0.56); Nikola Drama Threatens SPAC Deal Surge: ECM Watch
• ZEAL -2.1% (-$0.75)
• INFY -2.3% (-$0.31)
• FLDM -2.5% (-$0.21)
• KTOS -2.5% (-$0.49); Kratos Cut to Neutral at JPMorgan; PT $20
• RYAAY -5.1% (-$4.13)
• WKHS -4.8% (-$1.44)
• TSLA -4.7% (-$21.1); Tesla Dips After Musk Tempers Battery Day Expectations
• PTON -3% (-$2.82)
• DPHC -2.9% (-$0.90)
• KODK -2.8% (-$0.29)
• KC -2.6% (-$0.95); Kingsoft Cloud Files to Offer 8m ADR, Holder Files 9.7m ADR

David Wienke

Cabrera Capital Markets, LLC