Cabrera Capital Daily Game Plan

Wednesday January 27, 2021                                                        Trading
Desk: (312) 236-8907

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

DATA/HEADLINES:   
8:30ET Durable Goods;  1:30ET Biden speaks on climate change; 2:00ET  FOMC announcement, 2:30ET Fed’s Powell press conference

TODAY’S HIGHLIGHTS: 

• Beijing’s top policy official lays out strategy to address US ‘stranglehold’ over China
  SCMP
• Minority Leader Mitch McConnell yesterday threatened "immediate chaos" if Democrats weaken the filibuster, predicting objections to routine unanimous consent
  requests and quorum boycotts
• A Blackstone-managed group will buy Allstate Life Insurance from Allstate for $2.8 billion
  
• Boeing’s 737 Max received European flight clearance
  
• China is conducting military exercises in the Gulf of Tonkin from today until Saturday
  
• Police are dealing with an ongoing incident at an industrial estate in Wrexham where doses of the Oxford-AstraZeneca vaccine are produced and stored – BBC

World markets are lower as investors digest a wave of earnings reports as they wait for the latest Fed decision in the US. Analysts expect the
central bank to stick to its dovish tone to help speed the economic recovery.  Global COVID-19 cases surpassed 100 million and countries around the world are struggling with new variants of the virus and delays in vaccine rollouts. In Europe, supplies of the
COVID-19 vaccine have been delayed and hospitalizations in France hit an eight-week high. As the worst-affected region in the world, Europe is currently reporting a million new infections about every four days.  The International Monetary Fund raised its forecast
for global economic growth in 2021 after downgrading Europe’s growth outlook yesterday.   

EQUITIES: 
 

US equity futures are lower as investors weighed earnings reports and awaited the conclusion of the first Federal Reserve policy meeting of the
year. S&P 500 contracts slipped 1%, while Nasdaq futures outperformed following a strong fiscal second-quarter sales report from Microsoft. Apple, Facebook, and Tesla are all due to report earnings after the bell.  

But the big news is the heightened participation of retail investors in the stock market this week Amateur traders on Reddit’s WallStreetBets
discussion group piled into GameStop, causing it to skyrocket while professional short sellers scrambled to cover losses. The stock, which started the year under $20, was north of $300 in premarket trading this morning after notables such as Elon Musk and
Chamath Palihapitiya weighed in on the phenomenal rally. GameStop shares surged as much as 147% in pre-market trading, but fading after CNBC announced that Melvin Capital closed out of its short position in GME. Citron said it covered the majority of its short
in "the $90's at a loss of 100%."   A similar euphoria has boosted AMC (+110% pre-market), Blackberry, BBBY, and SPCE along with a few others where an army of retail traders crowd into the most shorted stocks on Wall Street. (see charts below).

December E-mini S&P futures -1.2%, Nasdaq -0.9%, Russell 2000 futures -2.6%, Dow futures -1.1%. Short term market top starting to seem more likely
as exuberance in most shorted names kicks in…  3791 is the .382 retracement of the year in SPX and initial key support.

Since its March 2020 low, the Russell 2000 has rallied more than an average its 2-year returns from other crisis lows over the last thirty years.

Some of the most shorted stocks are shown below

The VIX is testing its 200 day moving average.  A settle above would likely be seen as a short term negative for the broader market.

In Europe, the Stoxx Europe 600 Index extended losses after EU officials said AstraZeneca pulled out of a meeting scheduled for this evening
regarding the planned rollout of the company’s Covid-19 vaccine.  The EU has now confirmed that the meeting will take place. Losses are broad based with miners, retail, technology, and banks among the weakest sectors. Delivery Hero had the largest drop in
the DAX, falling 6.6%. Sweden’s largest bank SEB (+1.2%) said it plans to return more money to shareholders after unveiling results that beat estimates. Heavily shorted stocks including Klepierre SA and Pearson Plc jumped, after US videogame retailer GameStop
surged almost 700% this year. Microsoft’s bumper results overnight did little to help Europe’s tech sector, which dropped 2.2%.  Basic Resources are down 2.9%, Banks -2.4%, Oil & Gas -2.2%. CAC -1.3%, DAX -1.7%, Stoxx 600 -1.7%.

Asian stocks fell for a second day, with shares were hurt by some profit-taking as investors grew wary of stretched valuations. Equity benchmarks
in India, Vietnam and the Philippines were among the biggest losers. The Philippine Stock Exchange Index capped its eighth drop in nine sessions amid concern fourth quarter GDP data due Thursday may be weaker than estimated.  Materials was the worst performing
sector in the region followed by communication services as heavyweights Tencent Holdings and SoftBank declined. Stocks rose in Japan, Taiwan, and Singapore.  China stocks closed marginally higher, with banking and manufacturing shares leading the gains, as
upbeat industrial data suggested a sustained recovery.  Official data showed that profits at China’s industrial firms grew for the eighth straight month in December. China is the only major economy in the world to avoid a contraction in 2020.

FIXED INCOME: 
   

Treasuries erased declines in early US trading as stock futures fell, pushing 10-year note’s yield below 1.03% to a weekly low. Focus is on FOMC
statement at 2pm ET and corporate new-issue calendar headed by a multi-tranche 7-Eleven deal. The Fed is not expected to make any policy changes, but investors will be listening for changes in tone around the economic outlook and any mention of slowing down
the Fed’s asset purchases.

METALS: 

Gold prices slipped as the dollar climbed, with bullion trading in a narrow range ahead of the US Federal Reserve policy statement which investors
expect to give further clarity on monetary stimulus. Spot gold declined 0.6% and other metals also declined. Meanwhile, President Biden's $1.9 trillion stimulus plan has been met with objections from Republicans over the price tag. Gold is heading for a monthly
drop as investors weigh prospects for the recovery amid the pandemic, as well as progress on stimulus.

ENERGY:  

Oil steadied as signs of tightening supplies around the world offset concerns over the pandemic’s latest hit to demand.  China recorded its lowest
daily rise in COVID-19 cases in more than two weeks, helping limit losses.  US industry data pointed to a sharp drop in the nation’s crude stockpiles last week. If confirmed by government figures due today it would a sixth draw in seven weeks, compounding
signals of reduced supply from other regions.

CURRENCIES:  

The US dollar index edged higher, +0.4%, as markets waited for comments from Federal Reserve Chair Jerome Powell, who is likely to renew a commitment
to ultra-easy policy. Riskier currencies like the Australian dollar slipped 0.7% even with the IMF upgrading its forecast for 2021 global growth. The British pound climbed to its highest since April 2018, before paring gains. The euro fell after a European
Central Bank official said it has the necessary tools to avoid any further strengthening of the currency.

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

• AMC +220% (+$10.9); AMC More Than Doubles in U.S. Premarket, Adding to Week’s Surge
• GME +63.4% (+$93.8); Citron Covered Majority of GameStop Short in ‘$90’s’
• EXPR +44.1% (+$1.34); Express, Bed Bath Among Heavily Shorted U.S. Stocks Rising
• KODK +22.5% (+$2.12); Express, Bed Bath Among Heavily Shorted U.S. Stocks Rising
• AXDX +20.4% (+$2.45)
• REV +13.6% (+$1.80); Revlon Call Option Volume Surges; Open Interest Rises
• THCB +11.9% (+$1.71)
• PSO +11.1% (+$1.16)
• CANG +10.9% (+$0.93)
• RDHL +10% (+$0.84)
• UONE +9.8% (+$0.57)
• WVE +8.8% (+$0.86)
• PBI +8.6% (+$1.17); Pitney Bowes Climbs as Report Likens Stock to GameStop
• GOGO +7.6% (+$1.12)
• ACAC +7.5% (+$0.82); MGM Resorts-Backed Playstudios Is Said to Discuss SPAC Deal
• CLVS +7.4% (+$0.61)
• PDCO +6.9% (+$2.30)
• MAC +6.8% (+$1.32)
• FCAC +5.8% (+$0.63); Alan Mnuchin-Backed SPAC in Talks to Take Sharecare Public: Rtrs
• PSAC +5.7% (+$0.75)

Decliners

• EZGO -21.6% (-$3.91); Ezgo Technologies Rises 353%: Chinese U.S. Listings
• TTOO -14.9% (-$0.42); T2 Biosystems Prelim 4Q Revenue Misses Estimates
• TRXC -13% (-$0.47); TransEnterix Offering Prices 23.1m Shares at $3/Share
• PLUG -11.7% (-$8.57); Plug Power Offering Prices 28m Shares at $65/Share
• ISUN -9.4% (-$2.47)
• IZEA -9.2% (-$0.60)
• NNOX -8.6% (-$7.32)
• PRTS -8.5% (-$1.71)
• PLTR -8.4% (-$2.97)
• SUNW -8.3% (-$1.86)
• AMTX -8.3% (-$0.73)
• SCPS -7.6% (-$0.81)
• TPGY -7.6% (-$2.22)

David Wienke

Cabrera Capital Markets, LLC