LagunitaLLC
Short

NASDAQ Short Opportunities (03/26/2020) Part 2 - Please read

TVC:NDX   NASDAQ 100 Index
Just as we expected, the bills weren't official yet as Dem and Rep are fighting over. Here is the simple version of the conflict:
+ Dem is fighting over 2 things on the bills. First, the unemployment benefit (extra money/pension for jobless worker). Second: the job security: the employers can not fire or lay off their employees during this time, which also includes sick pay, unemployment insurance,... while receive aid funding from government. No stock buy back for corporations, just ensure them use the aid money wisely.
+ Rep: They don't go to the details and keep their perspectives, so that corporations can use the loan (500 billions) to do whatever they like in order to keep the economy going.
We think this fight will last about 1-2 days or even more.
Bad news for "bullish" team:
1. The unemployment claims (filed for unemployment benefit) will be released at 8:30 am Thursday, 03/26/2020. Fact: California governor has already reported their number, which will be above 1 million.
2. Fed will withdraw 45 billions from the market in the morning (45 billions). Then add money later (also 45 billions).
3. Most of the gains from the last two days are from Travel Sector (+36.93%), Oil and Gas (+23.75%), Hotel and Entertainment (+21,77%), Real Estate (+18.59%). Those numbers should be lower than expected as they are the most vulnerable sectors in real life.
4. Most of the loss are coming from essential businesses (-10% average). We have no clue why they decided to sell these stocks (Walmart, Costco, Walgreen,...).
5. Unemployment data will be released on Friday (03/27/2020).
Technical: RSI is at its peak, signal a sell. Squeeze momentum indicator has flag a sell.
Scenario 1 (Red): Stock will go straight down tomorrow.
Scenario 2 (Yellow): Stock will rally again until it touches the blue resistance line, could be after-hour, then it will drop .
Good luck.

Comments

it went to scenario 2
Reply
LagunitaLLC borislavrabrenovic
@borislavrabrenovic yes, indeed
+1 Reply
@LagunitaLLC, what you think when it will start to go down ??? Maybe Gov will announced bills when unemployment claims come out and than to have same situation like today . What you think??
+1 Reply
LagunitaLLC borislavrabrenovic
@borislavrabrenovic, the House will have the meeting tomorrow and most likely Bernie will be the bipartisan voter. This is bad for the House because they can violate the Constitution law. At a result the bill will take another day to pass. So far the market went in the opposite way as we expect. Firstly, the longer it takes for the bills to become official the market should be red. Secondly, unemployment claims twice as much as the expectation, again, the market should be red. This non-sense happens because of the Fed. They printed more money and pumped as much as they want to the market. Evidence? US Treasury 1-month and 3 month are all negative now. However, this is not a healthy stimulus, all they do is creating more trouble the US economy, more debt, more inflation (I'm pretty sure they followed the Keynesian economics). In fact, Keynesian economics is only effective when people still have the chance to spend money, and they go to work. In real life, people spend less more while at home, some can't go to work and is jobless. So place your bet.
+1 Reply
@LagunitaLLC, thanks mate , good explanation
+1 Reply
@LagunitaLLC, is it already started to go down or maybe later will try to go up and to touch support
Reply
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