Cabrera Capital Daily Game Plan

Friday November 20, 2020                                                        Trading
Desk: (312) 236-8907

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

DATA/HEADLINES:   
8:30ET Chicago Fed National Activity Index; 9:45ET Markit Manufacturing/Services PMI; 11:30ET 2 Year Note Auction; 12:30ET Fed’s Barkin speaks; 1:00ET Fed’s Daly speaks, 5 Year Note Auction; 3:00ET Fed’s Evans speaks

TODAY’S HIGHLIGHTS: 

• Pressure is growing from Republicans on President Trump to concede defeat in the election
• Joe Biden chose longtime adviser Antony Blinken as secretary of state
  
• The White House may issue list of 89 Chinese companies denied access to US tech exports due to their military ties
  
• On Saturday, a federal judge in Pennsylvania said Trump’s challenge to mail-in ballots in the state had been “haphazardly stitched together” like “Frankenstein’s
  monster” and dismissed the case
• The US is now averaging almost 110,000 more daily COVID cases than a month ago
• MERCK TO BUY ONCOIMMUNE FOR AN UPFRONT PAYMENT $425M CASH

Global stocks and oil advanced as what has become a regular Monday dose of vaccine optimism buoyed sentiment after AstraZeneca said its shot
prevented most people from developing Covid. Adding to sentiment, the US is moving closer to mass immunizations as US Operation Warp Speed aims to start vaccinations in less than three weeks. Britain’s AstraZeneca said its vaccine could be around 90% effective
without any serious side effects.  It plans to start shipments by year-end and will be able to supply 3 billion doses globally in 2021. The vaccine will be far cheaper than the others previously announced and can be stored in an ordinary fridge.  According
to JP Morgan analysts, global stocks may see an exodus of about $300 billion by year-end, as multi-asset investors rotate into bonds to revert to a 60/40 allocation. On Saturday, the World Bank warned G20 leaders that failing to provide more permanent debt
relief to some countries now could lead to increased poverty and a repeat of the disorderly defaults seen in the 1980s.   

EQUITIES: 
 

US equity futures rose on optimism over a Covid-19 vaccine, with AstraZeneca saying its shot prevented illness in most people. The vaccine stopped
an average of 70% of participants in a large trial falling ill. While the efficacy falls short of the headline numbers from Pfizer and Moderna, early analysis of the results showed 90% effectiveness can be achieved through altering the dosing regimen.  A top
official of the US government’s vaccine development team said on Sunday that the first vaccines could be given to US healthcare workers and others by mid-December.  Pfizer gained 1.25% and Moderna climbed 3.9% in pre-market trading.

December E-mini S&P futures +0.65%, Nasdaq +0.40%, Russell 2000 futures 1%, Dow futures 0.7%.  3590 is initial short term key resistance in SPX
this morning.

We continue to look for small caps to outperform with spot Russell 2000 making all-time highs

Energy sector ETF, XLE, is trading above its 200 day moving average in pre-market trading. A clean break and settle above it would help extend
gains.

European shares jumped as encouraging developments around a coronavirus vaccine spurred bets of a faster economic revival.  But the Stoxx 600
Index pared gains after Danone announced it would cut as many as 2,000 jobs. The euro area is sliding into another contraction as lockdowns inflict a massive toll as the composite PMI fell to 45.1 in November from 50, led by services. Germany, Europe’s largest
economy, contracted faster this month after lockdown measures were introduced while in France the economy shrank at the fastest pace since May. Britain, which is outside the euro zone and has suffered the highest COVID-19 death toll in Europe, a new wave of
coronavirus restrictions hammered its services sector.  AstraZeneca shares slipped 2%, with traders attributing the drop to its vaccine showing lower efficacy than rivals such as Pfizer. Energy and banking shares led markets higher with Spanish oil producer
Repsol jumping over 7% following a report that it may move to an all-cash dividend. Credit Agricole SA climbed 2.8% after agreeing to buy an Italian bank. Energy +2.3%, Banks +1.6%, Autos +0.8%, Travel & Leisure +0.65%, DAX +0.5%, CAC +0.4%, FTSE 100 flat.

All markets in the Asian region were up, with Thailand's SET advancing 2.2%, South Korea's Kospi increasing 1.9%, and the Shanghai Composite
Index rising 1.1%. China’s CSI300 blue-chip index ended at its highest in more than five years, led by gains in materials (+2.1%) and energy stocks (+3.8%), as hopes of a vaccine-led recovery boosted risk appetite. South Korean equities hit a record high,
as heavyweights Samsung Electronics (+4.3%) and SK Hynix (+3.3%) surged on improving demand and an upbeat outlook for the chip industry.  Shares of India-based suppliers to AstraZeneca gained after a study shows its Covid-19 vaccine prevented an average of
70% of cases. Australian shares closed higher with energy and mining firms leading, as lifting of border curbs in the country’s two most populous states boosted risk appetite, while New Zealand ended firmer on record retail sales. Japan was closed for a holiday.

FIXED INCOME: 
 

Treasury futures hover near session lows as U.S. trading begins after AstraZeneca said its vaccine prevents an average 70% of Covid cases. Improved
risk appetite lifted equity index futures toward Friday’s high, adding to pressure on Treasuries. Bond traders are gearing up for $197 billion of 2, 5- and 7-year sales, including FRNs, today and tomorrow in a holiday-shortened week. And an above-average month-end
index extension may help the long-end outperform. Yields cheaper by 0.5bp to 3.6bp across the curve led by long end, steepening 2s10s and 5s30s by more than 2bp.

TLT remains negative below its
200dma

METALS: 

Gold eased as AstraZeneca injected fresh optimism into the race for a COVID vaccine, bolstering appetite for riskier assets. The positive vaccine
developments prompted investors to bet on a quicker global economic recovery, but losses in gold were capped by a weaker US dollar. Spot gold fell 0.25%. December Gold future has pivotal support at 1848*

ENERGY:  

Oil touched its strongest level since early September as signs that Covid-19 vaccinations in the U.S. could be underway within three weeks improved
the demand outlook. Optimism that relief from the pandemic is in sight has seen the market look past surging infections and more lockdown measures. The opening of a Hong Kong-Singapore travel bubble has been delayed by two weeks due to an uptick in cases in
the Chinese territory. 

Both Brent and WTI are gaining some momentum above their 200 day moving averages. WTI may be headed toward the long term .618 key retracement
around $50.

Natural gas rose as forecasts for milder-than-normal winter weather faded in some parts of the US.

CURRENCIES:  

The dollar dropped 0.4%, to a two-and-a-half year low as the prospect of vaccine rollouts added to headwinds for the world’s reserve currency.
According to Citigroup, the dollar is likely to drop as much as 20% in 2021 should Covid-19 vaccines become widely distributed and help revive global trade and economic growth. The prospect of an extended period of loose monetary policy from the Federal Reserve
is further weighing on the dollar. Sterling rallied 0.6% versus the US$ as more positive news about a COVID-19 vaccine drove investors to buy riskier currencies and offset concerns about whether Britain and the EU can clinch a Brexit trade deal. The New Zealand
dollar hit a two-year high after strong retail sales data, reducing the risk of further policy easing. The euro gained 0.4% as European Union leaders continue to discuss the bloc’s 1.8 trillion euro COVID recovery plan, which has been vetoed by Poland and
Hungary.

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

• KXIN +40.4% (+$2.45); China’s Kaixin Nears 1000% Annual Gain on Electric Vehicle Rally
• IDEX +32.5% (+$0.50); Ideanomics Increases Its Stake in e-Tractor Company Solectrac
• IDT +24.3% (+$2.31)
• BLNK +16.3% (+$3.69)
• AYRO +16.2% (+$1.31)
• ATRO +15.2% (+$1.72)
• SBE +14.3% (+$3.74)
• SY +13.5% (+$1.96)
• CIIC +13.2% (+$2.25)
• CAN +12.9% (+$0.55)
• RENN +12.7% (+$0.55)
• FCEL +11.2% (+$0.62); FuelCell Energy, XPeng Climb: NEX Index Movers
• BEEM +10.9% (+$2.75)
• MESO +10.7% (+$1.47)
• ACH +10.4% (+$0.76)
• EIGR +10.1% (+$1.01); Eiger Biopharmaceuticals’s Zokinvy Approved by U.S. FDA
• SPI +10% (+$0.96)
• UMC +9.5% (+$0.55)
• NGA +9.2% (+$0.99)
• CBAT +8.3% (+$0.66)

Decliners

• DNK -7.7% (-$0.31)
• NIU -6.8% (-$2.44)
• SOLO -5.2% (-$0.56)
• ENLV -4.6% (-$0.39)
• DQ -4.1% (-$1.71)
• BZUN -3.9% (-$1.62); Baozun 3Q Net Revenue Beats Estimates
• WWR -3.5% (-$0.23)
• GFI -3% (-$0.29)
• GSX -3% (-$1.97)
• NLS -2.9% (-$0.58)
• YSG -2.8% (-$0.57)
• ABCM -2.5% (-$0.48)
• AU -2.4% (-$0.54)
• LU -2.3% (-$0.33); U.S.-Listed Chinese Stocks to Watch: PetroChina, Sinopec, Cnooc

David Wienke

Cabrera Capital Markets, LLC