Stock Market: Continued China Risk With Hedge Funds Maxed Out

Here's some of the notes we told subscribers today. They receive this and other reports daily on tech, trading and markets including our world ranked stock picks and timing calls. To see our full comments along with specific stock picks click here.

If you read our work last week you weren't surprised by the weakness markets saw this week.

Last week we said we wanted to be "pretty hedged" and to "have stops." The combination of hedge funds maxed on buying and China's health concerns were the opposite direction everybody's leaning.

There was a record day-to-day jump in the China health cases spreading on Saturday. This problem has yet to peak out.

The Fed bought a ton on Friday as an offset but it won't be enough with the China concerns.

Think about it. Think about how many bulls are in the market that don't want to let go of their positions yet we have a major health and economic impact in China and Asia.

Why are people so bullish coming into this? The US and China just came to a trade cease fire. 2020 was setting up to be a huge year fundamentally. 2019 held up very well for tech fundamentals despite a trade war so 2020 without a trade war and the Fed pumping money should have been amazing.

So funds were getting ready for a huge year. So there's a lot of bulls long stocks and they are probably hoping the market goes up anyway, despite the news.

That means, right now you have so many bulls hoping hoping something changes in China. But that's a dangerous position.

As long as the pace of new cases in China and Asia keep increasing it makes sense to be on the cautious side investingwise.

The Fed also last week talked about a taper at their Fed-day press conference. People didn't call it a taper but that's what it was. There's the risk that the Fed taper through April 15th (if it happens) in combination with China's health issues can continue to weigh on a straight up, everybody-bullish market.

And, as we talked about last week the Fed repo support is potentially due to hedge funds maxed out tapping the repo facility through their brokers. So as the Fed pulls back that may cause hedge funds to need to front-run that liquidity risk. That can add steam to the China issue for markets.

For now its important to watch Asian markets in the morning. They are more volatile historically than US markets but since the issues are there it's a sign that if they're going down, the US has weight on it.

PS January 2019 was up huge which was a precursor to 2019's full year. For the S&P 500 ETF SPY, which we follow most. It was actually down 16ct for January. Something different.

Know what moves tech and markets. Top ranked big cap tech stock analysis and strong risk/reward stock timing and market calls. Trade With A Pro. Click here to find out more.

We just spoke to a ton of companies. See what are take is and what stock's we loved, liked or didn't like. We recently spoke to QCOM, SQ, TER, MSI, TTWO, ATVI, ROKU, AAPL, TTD, TWTR, SWKS, TSLA, FTNT, ANET, INTC, TWLO, WDC, JNPR, SPLK, MSFT, LRCX, FB. Any questions on them let me know.


All investments have many risks and can lose principal in the short and long term. The information provided is for information purposes only and can be wrong. By reading this you agree, understand and accept that you take upon yourself all responsibility for all of your investment decisions and to do your own work and hold Elazar Advisors, LLC, and their related parties harmless. All trades are hypothetical to show rating and opinion. All trades exclude relevant transaction costs. We have no holdings in the stocks mentioned unless otherwise noted.

Sign Up To Get Select Tech and Market Calls From Us, Free To Your Inbox

Contact Us

Name

Email *

Message *