Cabrera Capital Daily Game Plan

Friday December 18, 2020                                                        Trading
Desk: (312) 236-8907

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

DATA/HEADLINES:  
8:30ET Current Account Deficit; 10:00ET Leading Economic Indicators; 11:10ET Fed’s Brainard speaks

Quad Witch Expiration and S&P 500 Rebalance

TODAY’S HIGHLIGHTS: 

• The national poverty rate rose by 2.4 percentage pts from 9.3% in June to 11.7% in November
  link
• US Commerce Sec Ross: Confirms US will add SMIC to Economic Blacklist / ROSS SAYS U.S. ADDING A TOTAL OF 77 COMPANIES, AFFILIATES TO U.S. ECONOMIC BLACKLIST
• FDA backed Moderna's vaccine for emergency-use authorization, distribution to start immediately
  
• Nearly 40% of healthcare workers say it's 'not likely' they will get a coronavirus vaccine

I will be on vacation the last two weeks of the year, and wanted to wish everyone a healthy and Happy Holiday Season.

Global markets were mixed with investors still on edge over a Brexit trade deal and US stimulus package. The Bank of Japan raised its economic
growth forecast for next year and announced an extension of its COVID-19 loan programs by six months and a surprise review of its policy to consider “further effective and substantive monetary easing.”  China’s foreign ministry urged the United States to stop
its “unjustified” crackdown on Chinese companies, after Reuters reported that Washington plans to add dozens of Chinese companies to a trade blacklist. This morning it became official that the US will blacklist SMIC and around 80 other Chinese companies, restricting
access to US technology. China will also impose anti-dumping duties on rubber products imported from the US, South Korea and the EU.

EQUITIES: 
 Nasdaq, in coordination with NYSE, NYSE Arca and NYSE American, will use a joint market-wide call beginning at 3:30ET to keep
the industry informed throughout the afternoon of the S&P 500 rebalance.

US equity futures steadied after the indices closed at all-time highs Thursday, as Congress works to complete a pandemic-relief deal ahead of
a weekend deadline.  US lawmakers are trying to agree a coronavirus relief package but a new potential roadblock emerged as some Senate Republicans insisted on language ensuring that expiring Federal Reserve lending programs cannot be revived. Watch out for
wild swings as it's quadruple witching, which also coincides with Tesla's S&P 500 inclusion and the estimated $80 billion of stock trading it may force.  Shares of Palantir Technologies and Virgin Galactic Holdings fell 4% and 5.8%, respectively, in US premarket
trading. FedEx fell over 3% in extended trading after it failed to keep up with soaring expectations as a jump in costs at the ground unit crimped profit margins.

December E-mini S&P futures +0.15%, Nasdaq +0.1%, Russell 2000 futures +0.35%, Dow futures +0.1%. SPX has an initial target at 3732.75 (Fibonacci
extension).  

The NYSE Advance/Decline Line is giving a positive picture for the overall market tone

Tesla was upgraded by S&P Global Ratings, putting the company two steps from investment-grade, after a recent share sale boosted its cash to
record levels.  TSLA
currently trades at an extraordinary 170 times its projected 2021 earnings after soaring roughly 684% year-to-date (and 840% from
the March low). Tesla's $600 billion market cap signals it will join the benchmark index on December 21 as one of its most highly valued members and a weight of about 1.5%.
Howard Silverblatt, senior index analyst for S&P Dow Jones Indices, described it as "the mother of all" stock market rebalancing
events.  Tesla’s inclusion into the S&P 500 on Monday may cause greater volatility late in the day today. Get MOC / LOC orders out as early as possible and it is recommended not to use algos for the last 10 minutes.

European stocks fluctuated as traders eyed the latest attempt by British and EU negotiators to hash out a free-trade agreement from stalled Brexit
talks. German business morale rose unexpectedly in December even as Europe’s biggest economy went into a strict lockdown to contain a second wave of coronavirus infections. British retail sales dropped 3.8% in November, their biggest decline since the first
lockdown in April. Consumer confidence however, showed its biggest jump in eight years as households welcomed the availability of coronavirus vaccines. Chemical, health care and industrials outperform, but gains are mostly offset by losses in retail and travel
names. Adyen contributed the most to the Stoxx 600 index gain, increasing 3.2%. HelloFresh had the largest increase, rising 6.6%. DAX +0.45%, FTSE 100 +0.25%, Stoxx 600 +0.1%

Asian stocks traded lower amid fresh U.S.-China tensions.  Shares in Australia slid the most, -1.2%, as a cluster of Covid-19 infections in Sydney’s
northern beaches stoked investor caution. Qantas Airways fell 3.5% as travel names dropped. Japan’s Nikkei 225 fell 0.2% as the central bank left policy unchanged while data showed the country’s key consumer prices slid at the fastest pace in 10 years.  Even
so, the regional stock gauge was headed for a seventh straight weekly advance, the longest run since January. Hong Kong stocks closed 0.67% lower as market sentiment soured on news that the US was adding dozens of companies to a trade blacklist. The Shanghai
Composite fell 0.3% even as some companies affected by a US executive order rallied on an FT report that the Treasury is seeking to water down the investment ban.

FIXED INCOME: 
 

Treasuries are little changed as US trading day begins, off session highs. Small gains during Asia session were erased in London trading amid
gains for European stocks and US futures that pushed S&P 500 E-minis to new highs.  Curves are marginally steeper. Next US Treasury coupon supply is 20-year bond reopening on Dec. 21.  

METALS: 

Gold prices fluctuated near a one-month peak scaled in the previous session, as the dollar bounced back from lows, while investors pinned hopes
on a US fiscal stimulus deal. Spot gold was up about 2.2% for the week and set for a third weekly gain. Analysts also said gold would find support from the Fed's promise to continue its bond-buying program until "substantial further progress" is seen in restoring
full employment and hitting its 2% inflation target.

ENERGY:  

Oil steadied near a nine-month high, on track for a seventh weekly gain in a row as investors focused on the rollout of COVID-19 vaccines. Oil
prices have gained further support as the US works through the final points of a stimulus package that may boost near-term demand.  There are signs that some of the recent strength in the physical market is starting to ease, however. Recent price gains may
be a bit premature, with the demand recovery remaining bumpy, according to a note from UBS.  OPEC+ plans to add 500,000 barrels per day of supply in January, in a first step toward a 2 million bpd target, and the group will meet in early January to decide
on next steps.

CURRENCIES:  

The dollar consolidated losses on Friday after a week of declines that pushed it to its lowest in two and a half years. Policy updates from central
banks in the United States, Japan, Britain, Switzerland, and Norway this week should do little to upend recent currency market trends and the long-term weakening of the U.S. dollar, according to analysts. The pound reversed some of its gains against the dollar
and euro as talks over a Brexit trade deal between the UK and European Union continued. EU Brexit negotiator Michel Barnier said that “just a few hours” remained for negotiations to reach a new trade deal with Britain, with disagreements over fishing rights
clouding the prospects of a deal.

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 8:05am ET:

Advancers

• MREO +43% (+$0.95)
• DMTK +26.9% (+$3.85)
• BEAT +16.9% (+$10.5); Royal Philips to Buy BioTelemetry
• SURF +15.2% (+$1.29)
• DYAI +12% (+$0.74)
• ONDS +10.3% (+$0.75)
• ENIA +6.2% (+$0.50)
• WGO +5.8% (+$3.46); Winnebago Industries 1Q Adjusted EPS Beats Estimates
• CAN +5.4% (+$0.23)
• MVIS +5.2% (+$0.26)
• CLNY +5.1% (+$0.24)
• SCYX +4.4% (+$0.26)
• ORBC +4.4% (+$0.30)
• SBSW +4.3% (+$0.67)
• TPGY +4.2% (+$0.99)
• FUBO +4% (+$1.43)

Decliners

• MESO -30.7% (-$4.17)
• SCPS -19.1% (-$6.50)
• WNW -15.8% (-$19.3)
• GLSI -11.3% (-$5.02); Greenwich Lifesciences Prices $26.4M Upsized Offering of Stock
• SPCE -8% (-$2.05); Virgin Galactic Holders File to Offer Up to 113m Shares
• VVOS -7.6% (-$0.69)
• SLDB -5.7% (-$0.42)
• MNSO -3.7% (-$0.90)
• X -3.6% (-$0.66); U.S. Steel Sees 4Q Adj Ebitda About $55M, Est. $95.3M: Snapshot
• BTWN -3.5% (-$0.47)
• NNOX -3.5% (-$1.87)
• FDX -3.3% (-$9.53); FedEx 2Q Adjusted EPS Beats Estimates: Snapshot
• CNC -3% (-$1.87)
• PLTR -2.7% (-$0.74); Palantir Cut to Underperform at Credit Suisse; PT $17
• DASH -2.1% (-$3.21); DoorDash Rated New Positive at Susquehanna; PT $185

David Wienke

Cabrera Capital Markets, LLC