This is what you need to know today.

We have been sharing with you three very big negatives for a very long time.

• The main driver of stock prices is earnings.  We have been telling you for over a year that earnings are decelerating.
• We have also been telling you since 2011 that there are big problems in China that will come to roost big time some day.
• We have also had a bearish stance on oil since it was $108.
• We have been telling you for about two years that the stock market is fully valued but markets overshoot and undershoot.

To be successful at investing, it is important to be neutral and observe without prejudices and emotion.  At The Arora Report, we work very hard and have had decades of practice at leaving our opinions at the door every morning and start every day by observing hard data without any prejudice.

In this environment, when all of the focus is on the bad news, it is important not to ignore the good news.  Here are a few pieces of important good news.

• At a time when there is a lot of concern about European banks, Commerzbank, a large German bank, reported good earnings and the stock spiked up about 15%.
• U. S. economy is about 70% consumer based, American consumer is going strong.  Retail Sales ex-auto came at 0.1% vs. 0.0% consensus.
• There is a lot of concern about deflation.  Import prices ex-oil came at -0.2% vs. -0.4% consensus.
• The U. S. and Russia agreed on a cease fire in Syria.  Hopefully this will allow Saudis and Russia to start talking about oil prices.
• For the first time in the recent history, there is a report from a strong OPEC member, UAE, of potential talks of production cuts.
• CEO of JPM, one of the largest banks in the world bought 500,000 shares of JPM stock in the open market.

Gold, bonds and yen are falling on profit taking.  As a full disclosure, ZYX Short sold gold yesterday at an average of $1257.50 and took profits on half the position this morning at $1233.10.

Oil is attempting to stage a rally.

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

Gold futures are at $1235, silver futures are at $15.73, and oil futures are $27.86.

S&P 500 resistance levels are 1860, 1900, and 1909; support levels are  1838, 1800 and 1767.

DJIA futures are up 127 points.

What To Do Now?

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

Look forward to new buy zones early next week.

Consider continuing to hold existing positions.  Based on individual risk preference, consider holding cash 30 – 46%, and short to medium-term hedges of  32%.

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.

This is what you need to know today.

Riksbank, the central bank of Sweden, has now set its bench mark repo rate to minus 0.5%.  The move has set panic among many investors who are 100% invested.

Stocks and oil are falling.

Gold, yen and bonds are flying.

A big reason for the market to have not stabilized is that many large investors have continued to be 100% invested.  Even mom and pop have quickly turned less bearish.  In the AAII Individual Investor Sentiment Survey released yesterday, only 34.7% of investors are bearish compared to 39.9% of investors being bearish a week ago.

The market needs a cathartic sell off before stabilizing.  Given early indications of panic this morning among investors who are 100% invested, there is possibility of getting the much needed cathartic selloff in the near future.  However, if there is no wash off  and market start moving strongly higher from early morning lows, then the process of grinding lower may continue.

Yen’s gain against the U. S. dollar year to date is the best since 1988.  On fundamentals, such a move is just not sustainable.

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

Gold futures are at $1239, silver futures are at $15.71, and oil futures are $26.52.

S&P 500 resistance levels are 1838, 1860, and 1900; support levels are 1800, 1767, and 1732.

DJIA futures are down 273  points.

What To Do Now?

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

Look forward to new buy zones early next week.

Consider continuing to hold existing positions.  Based on individual risk preference, consider holding cash 30 – 46%, short to medium-term hedges of  37%.

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.

This is what you need to know today.

The text of Yellen’s speech acknowledges weakening economy and falling stock market.  She thinks the U. S. economy will motor through.  She also states that interest rate hikes are likely to be gradual and data dependent.

Yellen’s speech is in line with our projections.  However, it is going to disappoint many market participants who were expecting a clear statement that there will not be any interest rate hikes.  In our view, such expectations are unrealistic and harmful to the U. S. economy.

Actual testimony will start at 10:00 am ET.  There may be new market moving information in the Q&A session.  We will be carefully listening and will let you know  if important occurs.

We are lifting the suspension on all buy zones.

Based on the activity this week, we will be doing a lot of number crunching this weekend. The probable result will probably be complete portfolio update and new zones for long positions.  For short positions please depend on individual posts.

IEA report that we informed you of yesterday has been hitting oil hard.

Yesterday morning we shared with you that the sentiment on gold and silver is getting overly positive and typically there is a pull back when sentiment gets overly positive.  That call has proven spot on.  Gold and silver are pulling back.

Interest rates are ticking up and bonds are showing slight losses.

Dollar bulls are attempting to stage a rally.

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

Gold futures are at $1188, silver futures are at $15.20, and oil futures are $28.07.

S&P 500 resistance levels are 1900, 1909, and 1920; support levels are 1838, 1800, and 17.67.

DJIA futures are up 102 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 30 – 46%, short to medium-term hedges of  37%. Great profits have been booked on all of short-term hedges.

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.

This is what you need to know today.

Japan matters for two reasons.

• Foreigners rush into yen for safety
• It is the third largest economy in the world

Recently Japan introduced negative rates for three purposes.

• To stop foreigners from rushing into its currency
• Forcing banks to lend
• Increase exports by weakening the currency

Instead the opposite has happened.   Japan has lost control to foreigners.

Here is the news,

• Overnight foreigners rushed  to buy yen strengthening the currency.
• Overnight foreigners rushed to buy 10-year Japanese bonds.  The demand was so large that the yield dropped to a negative number for the first time in history.  The investors who were buying 10-year bonds overnight, will get back less money after 10 years than what they paid to buy them.
• Stronger currency is going to hurt exports, stock market fell about 5%.

In Europe there are new signs of stress in the periphery.  Yield on Portuguese bonds surged to 15 month highs.

Oil glut is getting bigger.  IEA says that supply will exceed consumption by an average of 1.75 million barrels per day. The estimate from IEA last month was 1.5 million.

Text of Yellen’s statement will be released at 8:30 am ET tomorrow.  The text may be a big market moving event.  In the alternate Q&A later in the morning may move the markets.

Gold and silver continue to move higher but sentiment in these markets is becoming overly positive.  Overly positive sentiment often indicates a short-term top.  The next big resistance levels in gold are $1205, $1217, and $1237.

Oil is not reacting to IEA report and is mostly range bound.

In the U. S. interest rates continue to fall and bonds continue to strengthen.

Our very, very short-term early stock market indicator is negative but can reverse quickly.

Gold futures are at $1195, silver futures are at $15.36, and oil futures are $29.45.

S&P 500 resistance levels are 1860, 1900, and 1909; support levels are 1838, 1800, and 1767.

DJIA futures are down 186 points.

What To Do Now?

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

All buy zones have been temporarily suspended on posts prior to February 8, 2016.

Consider continuing to hold existing positions.  Based on individual risk preference, consider holding cash 30 – 46%, short to medium-term hedges of  37% and 70% of the portfolio hedged with very, very short-term hedges.  Partial profits have been taken to reduce very, very short-term hedges from 75% to 70%.

The plan is to start taking profits by scaling out of the very, very short-term hedges as market falls.  Unless something else changes, the plan is to have realized profits on most of the very, very short-term hedges by later today or tomorrow. 

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.

This is what you need to know today.

On Friday we wrote,

We will be protecting 75% of the portfolio for the very, very short-term going into Monday morning.

The Friday call is proving spot-on.  There are distress signals all across various markets this morning but a rally is in the offing.

Here are the three main reasons.

• China Reserves
  Foreign exchange reserves of China fell to $3.23 trillion in January from $3.33 trillion in December.
  This is not a surprise to the Smart Money as the consensus number was a fall to $3.21 trillion.  However, the markets are full of not so informed investors who are acting surprised.
• Failed Meeting On Oil
  Over the weekend, Saudi Arabia and Venezuela had a meeting to discuss stabilization of oil prices.  The meeting failed.
• Nickel
  Nickel prices are being crushed.  Nickel is used in making stainless steel.  This is an indication of slowing global growth.

A Rally In The Offing

It is always difficult to predict the future of the markets and there are no guarantees.  Having said that, there is a setup for a rally in the offing.  Janet Yellen testifies in front of the House on Wednesday.  She probably will not rule out a March rate increase in her statement but indications from her statement will be  that a March rate increase is off the table.  If there is no such indication in the statement, she will be hard pressed by law makers on the subject.

If the past is any indication, rumors about rate hike off the table will be spread starting later today.  If the rumors take hold, market will rally.

Markets

Oil is falling, now below $30 as of this writing.

Dollar is getting stronger against euro but yen is rising against most currencies.

Gold, silver and bonds are strong as investors rush into their safe haven.

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

Gold futures are at $1182, silver futures are at $15.04, and oil futures are $29.90.

S&P 500 resistance levels are 1900, 1909, and 1920; support levels are 1838, 1800, and 1767.

DJIA futures are down 192 points.

What To Do Now?

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

All buy zones have been temporarily suspended.

Consider continuing to hold existing positions.  Based on individual risk preference, consider holding cash 30 – 46%, short to medium-term hedges of  37% and 75% of the portfolio hedged with very, very short-term hedges.

The plan is to start taking profits by scaling out of the very, very short-term hedges as market falls.  Unless something else changes, the plan is to have realized profits on most of the very, very short-term hedges by later today or tomorrow. 

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.