(The Weekly Digest reproduces the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers. )
OIL STILL OVER-OWNED, HEAVY LOSSES FOR YUAN BEARS
Retail investors have flooded into oil ETFs. The new data shows that at this time oil is over-owned by retail investors. Historically, a commodity forms a bottom only when it is under-owned by retail investors.
The consensus has been that the Chinese currency yuan would weaken against the dollar. There have been heavy bets by funds against the yuan. Markets always make fools of the maximum number of people; yuan has risen sharply causing heavy losses to yuan bears.
Interest rates are range bound.
After a short hiatus, momo crowd is back aggressively buying gold, silver and mining stocks.
Our very, very short-term early stock market indicator is positive.
Gold futures are at $1172, silver futures are at $16.19, and oil futures are $45.37.
S&P 500 resistance levels are 2100 and 2150; support levels are 2063, 2038, and 2017.
DJIA futures are up 126 points.
FED IN DISARRAY CAUSES MASSIVE SHORT SQUEEZE
To the clear-eyed, Fed is in disarray. What else can explain removal of the word ‘patience’ and replacing it with a whole bunch of words that collectively mean ‘patience’?
THE FED BEING IN DISARRAY SIGNIFICANTLY INCREASES THE RISK BOTH TO THE DOWN SIDE AND TO THE UPSIDE IN THE MARKETS.
The Fed statement caused a massive short squeeze in oil, gold, silver, bonds and currencies.
Oil has already given up all of the approximately 6% gain from the short squeeze.
Currencies have given up majority of the gain from the short squeeze.
Bonds are holding their gains.
Stocks are holding most of their gains from the short squeeze.
Our very, very short-term early stock market indicator is mild negative.
Gold futures are at $1161, silver futures are at $15.87, and oil futures are $45.06.
S&P 500 resistance levels are 2100 and 2150; support levels are 2063, 2038, and 2017.
DJIA futures are down 53 points.
FED ON TAP, HIGH RISK IN OIL AFTER THE INVENTORY DATA
FOMC will release its statement at 2:00 pm ET today. Yellen will give a news conference at 2:30 pm ET. At issue is if the Fed keeps the word ‘patience’ in relation to raising interest rates. Expect all markets to be volatile and please be alert to the Real Time Feed in case there are opportunities.
Somewhere in the near future, there is likely to be a generational opportunity to accumulate energy related assets. However in the very near term, the risks have become much higher.
The consensus in oil markets is that there is a 50% plus chance of an agreement with Iran. In the event of such an agreement, Iranian oil will start flooding the market in small steps but there may be significant immediate pressure on oil prices.
Option expiration on both Brent and WTI oil has been towards the upside, providing support to oil.
At 4:30 pm ET yesterday American Petroleum Institute (API) released inventory data for the week ending March 13. Oil inventories rose by 10.5 million barrels compared to consensus of 3.8 million barrels. This brings total U. S. inventory to 450 million barrels.
Today at 10:30 am ET the Department of Energy (DOE) will release its weekly inventory data. DOE data is considered more authoritative than API data. If DOE data shows significantly less oil buildup, expect oil to rally. However the oil market will still be staring at March 24th deadline for an agreement with Iran. If DOE data shows inventory buildup comparable to API data, expect oil to plunge. As of this writing, WTI, which is the bench mark for United States is trading at $44.14 (please note that we have switched over to May contract) WTI oil can easily fall to the range of $32 to $38. Brent crude, the bench mark for Europe is trading at $52.94 as of this writing.
Interest rates are falling on massive short covering in bonds ahead of the Fed statement.
Chinese tried to rally gold over $1150 but failed.
Our very, very short-term early stock market indicator is neutral.
Gold futures are at $1147, silver futures are at $15.48, and oil futures are $44.14.
S&P 500 resistance levels are 2100 and 2150; support levels are 2038, 2017, and 2000.
DJIA futures are down 83 points.
AMERICAN SMART MONEY WINS ANOTHER GOLD BATTLE WITH CHINESE, POTENTIAL IRANIAN OIL GLUT
As we have been sharing with you, lately Chinese buy gold aggressively in Shanghai overnight and then American Smart Money sells into the strength. Last night was different. There was buying in Shanghai but not aggressive buying. There was no strength for American Smart Money to sell into. Something we have not seen in a very long time happened this morning, American Smart Money sold aggressively into weakness. The result is that gold has broken the support at $1150.
There are concerns about the widening spread between German bunds and American Treasuries. These concerns are causing a sell off in stocks.
Interest rates are range bound.
Option expiration on both Brent and WTI oil has been towards the upside, providing support to oil.
The consensus in oil markets is that there is a 50% plus chance of an agreement with Iran. In the event of such an agreement, Iranian oil will start flooding the market in small steps but there may be significant immediate pressure on oil prices.
Our very, very short-term early stock market indicator is mild negative.
Gold futures are at $1143, silver futures are at $15.40, and oil futures are $43.42.
S&P 500 resistance levels are 2100 and 2150; support levels are 2038, 2017, and 2000.
DJIA futures are down 44 points.
GERMANY’S DAX AT ALL TIME HIGH, THE FED WEEK AHEAD
DAX which represents German stocks has moved to an all time high.
The Fed will announce its decision after a two-day meeting on Wednesday. Here the debate is whether the Fed will keep or abandon the word ‘patience’. The consensus is leaning towards removal of the word ‘patience’. If this happens, interest rate rise will be more likely in June and the U. S. stock market may throw another tantrum.
The pattern of Chinese aggressively buying gold and American Smart Money selling into the strength continues.
Oil is falling and threatening to break the $44 level.
Interest rates are range bound.
Dollar is trying to stabilize around 1.05 euro.
Our very, very short-term early stock market indicator is mild positive.
Gold futures are at $1154, silver futures are at $15.58, and oil futures are $44.18.
S&P 500 resistance levels are 2063, 2100, and 2150; support levels are 2038, 2017, and 2000.
DJIA futures are up 94 points.
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