(The Weekly Digest reproduces the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers.)

CHINA REBOUNDS

January 18, 2013

The fourth quarter GDP in China jumped to 7.9% breaking a streak of seven weaker quarters.  For the year, China grew at the slowest rate in more than a decade.

Bulls will use GDP number from China and good earnings from GE as justifications for trying to run the market higher.

Gold futures are at $1691, silver futures are at $31.97, and oil futures are $95.41.

S&P 500 resistance levels are 1480, 1500, and 1530; support levels are 1465, 1450, and 1444.

DJIA futures are up 8 points.

GOLD FALLS AND STOCKS FLY IN RESPONSE TO NEW ECONOMIC DATA

January 17, 2013

This morning stocks are flying and gold is falling in response to two pieces of economic data.  As our long time subscribers know, one of our favorite indicators is Weekly Initial Unemployment Claims.  The reason this is our favorite indicator is because it leads most of the other economic indicators and helps us to get ahead of Wall Street.

Weekly claims came at 335K vs 370K.  This is much better than expectations and is good news for the stock market.

The other big economic number of this morning is that housing starts came at 955K vs 889K.  Again this is consistent with what we have been telling you for a while that the housing market is improving.

In the face of good economic numbers which we have been correctly predicting for several months, recently we turned somewhat cautious.  The reason is two-fold.  First the super cliff is ahead in February and March;  market participants are ignoring the contentious dialogue that will go on in Washington.  Remember the U. S. debt down grade and the substantial fall in the stock market?

The second reason is technical in nature.  The market is right up against stiff resistance at 1474 in the S&P 500.  There is a high probability of this resistance being broken because hunt and destroy algorithms will chase stops of short sellers right over 1474.  The question is, “Will this be a false breakout?” If the breakout is sustained, the stock market is going much higher just on technicals.

Within a fraction of a second of the release of the data, our algorithms have been detecting buying by the momo crowd and selling by Smart Money.  There is no way to tell who will win in the very short-term.  However as of this writing the smart money is wining and gold has fallen.

Gold futures are at $1669, silver futures are at $31.14, and oil futures are $95.13.

S&P 500 resistance levels are 1474, 1480, and 1500; support levels are 1465, 1450, and 1444.

DJIA futures are up 53 points.

GERMANY TO MOVE SOME OF ITS GOLD BACK HOME

January 16, 2013

Previously there were rumors, now there is confirmation that Germany will bring about 700 tons of gold reserves from New York and Paris to Germany.

These gold bars were originally taken out of Germany so that they would not fall into the hands of the Soviets in the event of an invasion.

It is not uncommon for central banks to keep some of their reserves abroad so that they can use them quickly to buy forex if needed to avoid a crisis.  Since both France and Germany use the same currency, it does not make any sense for Germany to keep its gold in Paris.  Also now there is no threat of a Soviet invasion.

Even after repatriation, the amount of German gold held in New York will be reduced to 37% from 45% at present.

Contrary to speculation by some, in our analysis, this development will not have any meaningful effect on gold and silver prices.

Gold futures are at $1678, silver futures are at $31.31, and oil futures are $93.40.

S&P 500 resistance levels are 1465, 1474, and 1480; support levels are 1450, 1444, and 1439.

DJIA futures are down 53 points.

PRODUCER PRICES FALL THIRD MONTH IN A ROW, RETAIL SALES RISE

January 15, 2013

Our favorite leading indicator of inflation is Core Producer Price Index (PPI).  The reason is that core PPI tends to lead the Consumer Price Index (CPI).  Core PPI fell 0.2% in December compared to consensus of a 0.1% fall.

Retail Sales in the United States continue to be strong. December Retail Sales came at 0.5% vs 0.2% consensus.

Markets are overbought and super cliff is ahead.  Even though a big party is going on in the stock market, it is best to be cautious.

Gold futures are at $1681, silver futures are at $31.19, and oil futures are $93.83.

S&P 500 resistance levels are 1465, 1474, and 1480; support levels are 1450, 1444, and 1439.

DJIA futures are down 40 points.

GOLD AND SILVER RISE ON THE REPORT THAT SOME HOUSE MEMBERS READY TO SHUT DOWN THE GOVERNMENT

January 14, 2013

Gold and silver are rising on a report by Politico that some House Republicans are ready to shut down the government in the upcoming debt ceiling battle.

Interestingly we are seeing mild buying by the Smart Money and no buying by the momo crowd.  The buying by the Smart Money is difficult to decipher if it is new buying or buying to cover existing short positions.

This is bad news and its stands to reason that the momo crowd is not buying because they mostly buy on good news.  Smart Money buying is consistent with it buying on bad news.

Gold futures are at $1671, silver futures are at $31.05, and oil futures are $93.68.

S&P 500 resistance levels are 1474, 1480, and 1500; support levels are 1450, 1444, and 1439.

DJIA futures are down 13 points.

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