Flash Update – September 22, 2020

Published on: September 22nd, 2020

For leadership to change in a market on a secular basis, it almost always requires a bear. So unanchored have some of the market leaders become that the risk of a sharp correction at the very least has risen. Following an “Emperor has no clothes” moment at Powell’s FOMC press conference last week and the divisive scramble following the death of Ruth Bader Ginsburg, Julian discusses an aggressive tactical short that could pay dividends.

Comments

  • JF
    Javier F.
    23 September 2020 @ 18:49
    Seeing the Nasdaq today it seems like you timed this perfectly!
    • HM
      Harry M. | Real Vision
      24 September 2020 @ 08:12
      I will pass on your comment to JB. I was thinking the same thing!
    • JA
      Joseph A.
      28 September 2020 @ 12:13
      Further to my comment below with fibonacci confluence support levels I calculated, it would seem that 10700-10770 levels are acting as support as I suggested. I have done some new SHORT TERM resistance calculations to help folks further with the short entry on this trade if they are looking to either enter a new short position in nasdaq futures at better prices than 10700 or to add to existing positions at better prices and cost average. My suggested level where I see strong short term confluence come in is 11390/11393(x2 confluence levels)/11399. This gathering of levels is calculated from different pivots points going from near term pivots back as far as the all time high pivot and using hourly and 4 hourly charts which are appropriate for this short term analysis. FYI my previous analysis comment below was based on DAILY time frames only as they were for determining longer term confluence support. I am therefore submitting for your consideration that the 10770 level remains key support and not 10700 and that in the short term this bounce faces resistance at just below 10400 level in the short term and I can suggest fading the rally with shorts around this level improving the RRR based on Julians suggested stop loss at 11700. Thank you.
    • nw
      nicholas w.
      30 September 2020 @ 21:43
      Mmm. Its not looking like such a good call today, but Im sticking with it, and have my stops placed as advised.
  • mp
    michael p.
    24 September 2020 @ 23:37
    Julian et al., New to this also, No experience with shorts. How would you play this using Puts? Thanks so much.
  • nw
    nicholas w.
    22 September 2020 @ 13:13
    A Bold statement, and for what its worth I have been paying my tuition fees (so to speak) by day/three day bouncing with the Nasdaq- as a prelude to taking this position in more size. I will need to reduce exposure/give some back on Silver and Gold Miners (still a good bet long term, but too high a short term correlation); but this advice I will follow- and if it goes wrong take comfort of gains on out long term portfolio holdings.
    • nw
      nicholas w.
      22 September 2020 @ 13:15
      PS. Does anyone have any thoughts of how JB's Mexican position will play out in this please?
    • HM
      Harry M. | Real Vision
      24 September 2020 @ 08:23
      I doubt the position will be unaffected if equities drop. The EWW has a stop at 30. Our preference would be to keep it and have a bearish position in nasdaq delta, but the implication is that your position should be net bearish.
    • HM
      Harry M. | Real Vision
      24 September 2020 @ 10:08
      I asked JB specifically about EWW and got the following answer. "false break in USDMXN. Up thru 23 and in trouble. Mexican equity not crowded, but clearly vulnerable to extended period of risk off. Best hedge is to sell stuff not build a gross book but that is why stops are tight(ish) and targets high. EWW does best in weak USD / reflation environment. If this is more than a flash in the pan we will be stopped at 30"
  • JM
    Jake M.
    23 September 2020 @ 01:07
    Hi Julian, what if we have series of earnings beat? Is this the potential risk to the short nasdaq trade?
    • JM
      Jake M.
      23 September 2020 @ 13:46
      also, if vaccine is out in the next one to two months, is this potential risk going to hurt the short tactical trade?
    • HM
      Harry M. | Real Vision
      24 September 2020 @ 08:16
      Usual rules about answering for JB apply. Think of this as a tactical call which comes at a particularly interesting time. Worth noting that RP is has a similarly bearish take, but one which is more strategic. Its funny how often the tactical becomes strategic. But for JB, I think the critical pivot is around fiscal policy, and not around results. Clearly if results beat by a margin on the upside then we will be stopped out. But the surprise JB is more concerned about would be a deal between Trump and Pelosi for a CARES2
    • HM
      Harry M. | Real Vision
      24 September 2020 @ 10:07
      Of course, if Covid goes away then the odds are we will get stopped out.
  • DJ
    Dustin J.
    22 September 2020 @ 13:26
    Does anyone have any assumption as to the time horizon here? For instance if I were looking into put options, would this be a post-election type of play?
    • HM
      Harry M. | Real Vision
      24 September 2020 @ 08:22
      No, this is for now with a view to the market developing bearishly now.
  • DE
    David E.
    22 September 2020 @ 13:43
    I'm relatively new to this. Is put options would you guys would recommend using for this trade? Or is there another/better way to do this? Thank you!
    • HM
      Harry M. | Real Vision
      24 September 2020 @ 08:21
      One might argue that there are advantages to puts but they are not a free lunch. Ways to use the recommendation might include a) Selling your existing long positions b) Shorting futures c) Buying puts. But the bigger question is what you will do to risk manage the position? How much risk are you willing to take? Where would you stop out?
  • bb
    brian b.
    22 September 2020 @ 13:48
    would appreciate more specifics on many recommendations. your short TLT or go long tbt was ok, but no stop level on tbt, nor level if you do it via futures. is this supposed to be a futures trade, or short the ndaq, which is at 123 now, then stop at what. if buying puts, then expiration date? if inverse etf PSQ, stop at what.
    • JL
      J L.
      22 September 2020 @ 13:58
      the levels can be worked out according to one's own instruments, would waste costly time on the release these flash updates to let julian's team do it imo
    • HM
      Harry M. | Real Vision
      24 September 2020 @ 08:19
      We usually suggest stops but sometimes we prefer people to use their own common sense and risk perspectives. Ultimately we are all on our own, and if you do not think through the risks/rewards yourself it is probably very difficult to hold a position in the current vol. With respect to which instrument to use, I dont think it matters in the first order re Futures or etfs.
  • bb
    brian b.
    22 September 2020 @ 14:00
    sold 5 e mini nadsdaqfutures
    • HM
      Harry M. | Real Vision
      24 September 2020 @ 08:17
      So far so good!
  • RL
    Robert L.
    22 September 2020 @ 15:27
    Thanks for the bold perspective...I bought some puts about 6 weeks ago and just took profits as they helped me cover this first leg down. I fully expect a bounce as you indicate but at some point the chickens come home to roost. Key for me right now is not be dogmatic, I have longs and shorts simultaneously but against different timelines. This allows the situation to mature and I can cut trades that aren't working as data comes in.
    • HM
      Harry M. | Real Vision
      24 September 2020 @ 08:17
      A wise perspective!
  • JM
    Jake M.
    23 September 2020 @ 10:56
    Hi Julian, in which stage do you think bitcoin is in under Kindleberger’s Manias, Panics, and Crashes framework?
    • HM
      Harry M. | Real Vision
      24 September 2020 @ 08:13
      I cant think of a more controversial question to try and answer! What makes me think you follow JBs twitter feed?
  • JA
    Joseph A.
    22 September 2020 @ 13:04
    Thanks Julian, I would like to add some of my own technical analysis layered into this. I found a confluence of support for the Nasdaq at 10773-10775 which the market bounced off twice rapidly in the last few days, also see another area at 10017-10022 I don't find 8700 but I do find a long term 8503 price projection pivot from key fibonacci points in the long term. FYI this analysis is done on more than just simply fibonacci it includes pivots and retracements/extensions from different important long, medium and short term highs and lows. So while anything above 10700 sounds ok to enter (full disclosure I took a short hedge of my own around 12000 so am in the situation of repositioning my short after taking profits at 10770), I would be looking to see a clear break below 10700 and a daily close below that level to confirm the market is likely heading to the next target areas you are proposing.
    • nw
      nicholas w.
      23 September 2020 @ 09:04
      Thank you very much for this. Im still a Baby at this, and it is fascinating reading others' input. I was planning to wait a while too for any significant position. I might sell some December Spreads, sweat the margin for a bit, and then let orders kick in if Momentum moves through 10700. It would be helpful though if the $ would behave (Raoul may be right- again).
  • ML
    Michael L.
    22 September 2020 @ 14:47
    Many thanks Julian! Cheers
  • MD
    Michael D.
    22 September 2020 @ 13:05
    Can you give an equivalent level for say, QQQ?
    • BW
      Bradley W.
      22 September 2020 @ 13:25
      It looks like 8700 in NDX would correspond to ~212 QQQ. If you look at a weekly chart its where the price bounced off of the 20 ma at the end of April
  • ES
    Eric S.
    22 September 2020 @ 12:52
    Might just be me, but I am experiencing download issues. It fails to download the PDF.
    • ES
      Eric S.
      22 September 2020 @ 12:59
      Restarted the phone and its all good.
    • CF
      Christian F.
      22 September 2020 @ 13:01
      It downloaded as expected for me. Its probably your browser settings. You can try to right click and use the save-as option.
  • WM
    Will M.
    22 September 2020 @ 12:58
    working fine for me Eric
    • ES
      Eric S.
      22 September 2020 @ 12:59
      Cheers thanks

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TradeStation Crypto, Inc., Sr. Director of Product Strategy

James helped launch TradeStation Crypto’s offering which utilizes a true online brokerage model that self-directed investors and traders have come to expect for equities, futures, and foreign currency markets. He is a reputed crypto asset specialist and blockchain thought leader focused on helping people find innovative ways to participate in this space. He is active in the blockchain community with speaking engagements, TV appearances and mentoring. James has over 15 years of experience in the Fintech industry.

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He retired from managing client money at the age of 36 in 2004 and now lives in the tiny Caribbean island of Little Cayman in the Cayman Islands. Previously he co-managed the GLG Global Macro Fund in London for GLG Partners, one of the largest hedge fund groups in the world. Raoul moved to GLG from Goldman Sachs where he co-managed the hedge fund sales business in Equities and Equity Derivatives in Europe. In this role, Raoul established strong relationships with many of the world’s pre-eminent hedge funds, learning from their styles and experiences.

Other stop-off points on the way were NatWest Markets and HSBC, although he began his career by training traders in technical analysis.

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22-year Wall Street veteran who has been active in bitcoin and blockchain since 2012. In 2018-20 she led the charge to make her native state of Wyoming an oasis for blockchain companies in the US, where she helped Wyoming enact 20 blockchain-enabling laws. From 2016-18 she jointly spearheaded a blockchain project for delivering market index data to Vanguard as chairman and president of Symbiont, an enterprise blockchain start-up. Caitlin ran Morgan Stanley’s pension solutions business (2007-2016), heldsenior roles at Credit Suisse (1997-2007) and began her career at Salomon Brothers (1994-1997). She is a graduate of Harvard Law School (JD, 1994), the Kennedy School of Government (MPP, 1994) and the University of Wyoming (BA, 1990).

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