WEEKLY MARKET DIGEST: BULLS ALMOST ERASE 2016 LOSSES, IEA SAYS OIL MAY HAVE BOTTOMED $DIA $GLD $QQQ $SLV $SPY $TBF $TBT $USO

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WEEKLY MARKET DIGEST: BULLS ALMOST ERASE 2016 LOSSES, IEA SAYS OIL MAY HAVE BOTTOMED $DIA $GLD $QQQ $SLV $SPY $TBF $TBT $USO

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

IEA SAYS OIL MAY HAVE BOTTOMED, MASSIVE EURO SHORT SQUEEZE

This is what you need to know today. 

IEA has just come out with the statement that oil prices may have bottomed.  This is in sharp contrast to an extremely bearish statement from the agency last month.   According to IEA, world consumption will increase by 1.2 million barrels and production will decrease bringing surplus from 1.7 million barrels per day to 200K barrels per day in the second half of this year.

Compare IEA rating on oil with The Arora Report rating on oil.  On February 16, 2016, The Arora Report upgraded oil to neutral when it was trading at $29.36 after staying bearish when oil was $108.  IEA upgrade comes when oil is at $38.50 and IEA stayed bullish on oil during most of its decline.  No wonder many investors across the globe make the Morning Capsule from The Arora Report their ‘must read.’

Yesterday during his press conference, Draghi stated that the latest rate cut might be the last one for a while.  This triggered a massive short squeeze in the euro. The short squeeze seems to be reaching its peak.

Interest rates have ticked up slightly.

Oil is rallying on IEA report.

Momo crowd is aggressively buying gold.

Our very, very short-term early stock market indicator is positive.

Gold futures are at $1267, silver futures are at $15.60, and oil futures are $38.60.

S&P 500 resistance levels are 2017, 2038, and 2063; support levels are 1962, 1920, and 1909.

DJIA futures are up 131 points.

What To Do Now?

It is important for investors to look ahead and not in the rear view mirror.

Consider continuing to hold existing positions. Based on individual risk preference, consider holding cash 26 – 42%, and short to medium-term hedges of  25%.

It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.

A Reminder 

As our long time subscribers know well, that during the 2008 and early 2009 market crash, when stock market lost about 50%, subscribers to The Arora Report made money by the boat load.  For long only investors, this remarkable performance was achieved by using inverse ETFs.

Our models do not expect a repeat of 2008.  In the most likely worst case, there may be a garden variety bear market that typically occurred every 18 to 24 months prior to the recent six-year market run.

Individual Trades

Please click on Home on the left side of the Menu.  Scroll down on the Home Page for individual trades.

Click on the Search by Symbol/Tag on the right hand side and click on the symbols of interest.

 

DRAGHI LIVES UP TO HIS REPUTATION OF BEING SUPER MARIO

This is what you need to know today.

There was lots of skepticism about Draghi’s ability to meet high expectations given the limited set of tools available to ECB.

In yesterday’s Morning Capsule we wrote,

In our analysis, more likely than not, Draghi will meet expectations.

Yesterday our analysis was in the minority.

ECB has issued a new policy statement.  Here are the key parts:

  • Interest rates on overnight deposits by banks are cut by 10 basis points to -0.4%.
  • The benchmark rate is cut to zero.
  • Amount of bonds to be purchased per month has been raised to 80 billion euros.
  • ECB can now purchase corporate bonds.
  • Dollar and European stocks are flying.
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10 year Treasury yields in the U. S. first spiked and then came right back down.  In our analysis the second reaction is the correct one.

Gold first fell under $1240 on heavy volume and then started running up to almost $1255.  There is too much noise in the data to figure out at this time who is buying.  Logically, the spike up in gold does not make any sense, the first reaction of a dip is the correct reaction.  With gold, it is always difficult to say what will happen because it is primarily controlled by the momo crowd which has never been logical and acts on emotion as well as momentum.

Oil is back over $38.

Our very, very short-term early stock market indicator is positive.

Gold futures are at $1251, silver futures are at $15.37, and oil futures are $38.29.

S&P 500 resistance levels are 2017, 2038, and 2100; support levels are 1962, 1920, and 1909.

DJIA futures are up 126 points.

What To Do Now?

It is important for investors to look ahead and not in the rear view mirror.

Consider continuing to hold existing positions. Based on individual risk preference, consider holding cash 26 – 42%, and short to medium-term hedges of  25%.

It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.

A Reminder 

As our long time subscribers know well, that during the 2008 and early 2009 market crash, when stock market lost about 50%, subscribers to The Arora Report made money by the boat load.  For long only investors, this remarkable performance was achieved by using inverse ETFs.

Our models do not expect a repeat of 2008.  In the most likely worst case, there may be a garden variety bear market that typically occurred every 18 to 24 months prior to the recent six-year market run.

Individual Trades

Please click on Home on the left side of the Menu.  Scroll down on the Home Page for individual trades.

Click on the Search by Symbol/Tag on the right hand side and click on the symbols of interest.

THE WAIT BEGINS FOR ECB TO THREAD THE NEEDLE

This is what you need to know today.

European Central Bank (ECB) will announce its policy decision tomorrow morning.  Smart Money is optimistic that Draghi can thread the needle between stimulating economy and not hurting the banks with negative interest rates.  In addition to the policy statement, the press conference will be a market moving event.  Expectations are high.  In the past, for the most part, Draghi has met or exceeded expectations.  For this reason, just in case tomorrow happens to be a rare occasion of Draghi not meeting expectations, look out below.

In our analysis, more likely than not, Draghi will meet expectations.

In yesterday’s Morning Capsule we wrote,

In our analysis, Chinese exports are likely to recover next month.

The U. S. stock market is overbought and this headline is likely to bring stocks down  until Smart Money digs below the surface.

Our call has proven spot on.  Less informed investors sold on the scary headline from China.  The Smart Money stepped in on the dips to buy stocks.

As we expected, Smart Money also stepped in to sell the rise in gold on the scary news from China. Most of the selling by Smart Money was done over $1270.

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Smart Money is also lightly selling U. S. Treasuries, Japanese bonds and German bunds.

After brief profits taking, oil is attempting a rally again.

Asian currencies we hit hard overnight; the South Korean won being hit the hardest.

Our very, very short-term early stock market indicator is positive.

Gold futures are at $1253, silver futures are at $15.31,  and oil futures are $37.17.

S&P 500 resistance levels are 2000, 2017, and 2038; support levels are 1962, 1920, and 1909.

DJIA futures are up 92 points.

What To Do Now?

It is important for investors to look ahead and not in the rear view mirror.

Consider continuing to hold existing positions. Based on individual risk preference, consider holding cash 26 – 42%, and short to medium-term hedges of  25%.

It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.

A Reminder 

As our long time subscribers know well, that during the 2008 and early 2009 market crash, when stock market lost about 50%, subscribers to The Arora Report made money by the boat load.  For long only investors, this remarkable performance was achieved by using inverse ETFs.

Our models do not expect a repeat of 2008.  In the most likely worst case, there may be a garden variety bear market that typically occurred every 18 to 24 months prior to the recent six-year market run.

Individual Trades

Please click on Home on the left side of the Menu.  Scroll down on the Home Page for individual trades.

Click on the Search by Symbol/Tag on the right hand side and click on the symbols of interest.

PLUNGING CHINESE EXPORTS CAUSE FEAR AGAIN

This is what you need to know today.

Chinese exports fell 25% year over year vs. 13% consensus.  This is the biggest plunge since the great recession of 2009.  The headline number is causing fear in the markets again.  Digging below the surface shows that the headline number has an anomaly.  Last year,  Chinese Lunar New Year holidays were in March.  This year they were in February.  Therefore it is an apples to oranges comparison.

In our analysis, Chinese exports are likely to recover next month.

The U. S. stock market is overbought and this headline is likely to bring stocks down  until Smart Money digs below the surface.

Gold is being bought aggressively by the momentum crowd on anticipation of the stock market falling on this number.

Oil is maintaining its strong rally but is near the resistance.

Due to safe haven demand, U. S. bonds and Japanese yen are strengthening.

Our very, very short-term early stock market indicator is negative.

Gold futures are at $1277, silver futures are at $15.69, and oil futures are $37.62.

S&P 500 resistance levels are 2000, 2017, and 2038; support levels are 1962, 1920, and 1909.

DJIA futures are down 99 points.

What To Do Now?

It is important for investors to look ahead and not in the rear view mirror.

Consider continuing to hold existing positions. Based on individual risk preference, consider holding cash 26 – 42%, and short to medium-term hedges of  25%.

It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.

A Reminder 

As our long time subscribers know well, that during the 2008 and early 2009 market crash, when stock market lost about 50%, subscribers to The Arora Report made money by the boat load.  For long only investors, this remarkable performance was achieved by using inverse ETFs.

See also  WEEKLY STOCK MARKET DIGEST: HEAVY ECONOMIC DATA AND FED SPEAK WEEK SHOWS INVESTORS OPPORTUNITIES BEYOND BIG TECH

Our models do not expect a repeat of 2008.  In the most likely worst case, there may be a garden variety bear market that typically occurred every 18 to 24 months prior to the recent six-year market run.

Individual Trades

Please click on Home on the left side of the Menu.  Scroll down on the Home Page for individual trades.

Click on the Search by Symbol/Tag on the right hand side and click on the symbols of interest.

 

BULLS CLOSE TO ERASING 2016 LOSSES BUT MARKET VOLATILITY AHEAD, IRON ORE RIPS

This is what you need to know today.

Bulls are close to erasing 2016 losses.  The market is likely to open lower today, but as of Friday’s close S&P 500  has gained in 10 out of the last 15 trading days.  Several market sectors are positive for the year.  S&P 500 is now down only 2.2% for the year.

Several emerging markets have been exceptionally strong.

Capital outflows from China are slowing. In February forex reserves fell by $28.6 billion vs. $41 billion consensus.

China has officially lowered its growth target to 6.5 – 7%.

It is still not all clear as earnings are decelerating.

Iron ore jumped 19% overnight, its best one day gain ever.

Oil is managing to stay above $36.

Currencies, interest rates and bonds are range bound.

Gold is seeing aggressive buying by the momentum crowd.  It is worth noting that Smart Money is selling into the strength.

Our very, very short-term early stock market indicator is negative.

Gold futures are at $1267, silver futures are at $15.68, and oil futures are $31.16.

S&P 500 resistance levels are 2000, 2017 and 2038; support levels are 1962, 1920, and 1909.

DJIA futures are down 54 points.

What To Do Now?

It is important for investors to look ahead and not in the rear view mirror.

Consider continuing to hold existing positions. Based on individual risk preference, consider holding cash 26 – 42%, and short to medium-term hedges of  25%.

It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.

A Reminder 

As our long time subscribers know well, that during the 2008 and early 2009 market crash, when stock market lost about 50%, subscribers to The Arora Report made money by the boat load.  For long only investors, this remarkable performance was achieved by using inverse ETFs.

Our models do not expect a repeat of 2008.  In the most likely worst case, there may be a garden variety bear market that typically occurred every 18 to 24 months prior to the recent six-year market run.

Individual Trades

Please click on Home on the left side of the Menu.  Scroll down on the Home Page for individual trades.

Click on the Search by Symbol/Tag on the right hand side and click on the symbols of interest.

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