A GDP Play, Socially-Distant or Not

While I am well aware that consumers are capable of running up charges on their Visa cards even in a socially-distant new world, the reality is that as a new Stimulus Bill remains in limbo and states like New Jersey are about a month away from a full-blown reopening, the notion of Visa's one-way rally since 2011 persisting seems a bit too sanguine, even for this market and even for this Fed. Fed Chair Powell cavalierly threw around a 5% GDP figure yesterday, which seems at odds with his pledge to keep rates near zero until 2022. In other words, the GDP picture remains suspect. 

With a healthy market cap of $400 billion, Visa, below on its daily chart, has pulled off a stunning rally since the March lows like many other prominent names in this market. 

However, the stock is gapping down hard today, erasing the last two weeks of gains or so in one fell swoop. That gap (arrows) may prove to be a bearish "breakaway" gap lower, meaning it is a gap which does not get filled higher. Recall that most gaps on a chart do indeed get filled, which is why the average gap is referred to as a common gap.

But in this technical setup, with the small caps, for example, failing to make a new high on the rally and then knifing back hard below their 200-day moving average on the IWM ETF, a viable case can be made for Visa having jut completed a dreaded lower swing high and is now turning over for a new leg down 

In this type of tape, my inclination is to start "big" with shorts, meaning some bloated market caps like AAPL and MSFT over $1.4 trillion, and seek to become more aggressive if bears show they can hold the market down for more than just one scary day.