Weekly game plan
Every week needs a new plan! Markets change all the time. New fundamental drivers emerge, technical setups mature or fail and our trading plan must adjust in order to keep up with the ever changing environment. Here we will highlight some of the trade ideas that are generated within our client community so that you can stay on top of what our HCA trading community is looking out for and planning to trade at the beginning of each week.
It’s no secret that this is probably one the most hated stock market rallies of all time. In fact, that is probably pretty accurate for the entire bull market since 2009, really. The question is when? Another good question is, is our idea of what fair value is anywhere near what it really is? In truth, we don’t really know how things will turn out. All we can do is trade the setups that we see and make sure that we manage risk accordingly.
If there is going to be COVID related fallout from the demonstrations, we should start seeing an uptick in COVID-19 cases around the world in the coming week or two. This will be an interesting metric to watch as it could potentially send half the world back to hard-lockdown. We’ve already seen the state of Florida (in the U.S.) record a record number of new cases last week. Should that trend continue and emerge in other states or even in other countries, we think that it could create a reasonable amount of fear in markets once more.
Perhaps that market is trading higher on Robinhood accounts fueled by free money from the U.S. government, or short covering leading to massive buying volume as bearish traders get caught with their hands in the cookie jar? From a fundamental perspective, it does not make sense to us how world markets can be trading towards the highs while the world is still in the process of collapsing.
It would seem that even though the world is feeling a little better about the coronavirus, fears and uncertainties around the trade relations between the U.S. and China are flaring up again. Moreover, it seems that relations between China and Hong Kong could be a negative catalyst that could bring some risk off sentiment into the market. Overall our feeling is still slanted toward bearishness.