Weekly Digest from The Arora Report is popular among serious investors and money managers because they have found studying insights from the prior week gives them an edge over the coming weeks. Here is the day by day rundown from the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers of The Arora Report.
Please scroll down for the section What To Do Now.
GOLD, EURO, AND YEN FALL ON STRONG DURABLE ORDERS BUT STOCKS RESILIENT, FOMC MINUTES AHEAD
This is what you need to know today.
Durable Orders
Durable Orders Ex-transport came at 1.0% vs. 0.3% consensus. In our models, we exclude transports because they are noisy and do not allow for good analysis. To learn how we filter out noise please click here.
Gold, silver, euro and yen are spooked over the headline number which is even stronger. Headline number on Durable Goods came at 4.8% vs. 1.1% consensus.
Initial Claims
Initial Jobless Claims came at 251K vs. 243K consensus but the prior was revised to 233K from 235K. This is a leading indicator and is updated weekly. For these reasons, it carries heavy weight in our models. To filter out the noise we use a moving average. Right now the indicator is showing that the U. S. economy is strong and the employment picture is in good shape.
Gold, Yen And Euro Breaks Support
Gold fell to $1189 immediately after durable goods data was released. Gold has now decisively broken the support at $1200. Hunt and destroy algorithms are having a field day taking out stops of amateurs placed right below $1200.
After all of these stops are taken out, expect a weak rally.
Based on the communications we have received in social media, amateurs who think they are hot shots in technical analysis are short selling gold on the break of $1200 with stops right above $1200. Professionals know this often repeated behavior. Expect professionals to try to rally gold to take out stops of newly established shorts.
The plan is to take advantage of the weakness in gold miners to scale into a higher level of hedge as stated in the post yesterday in ZYX Short. Remember it is important to look ahead to Italian referendum on December 4th which is a potential catalyst for gold move up.
Euro has broken support at $1.06.
Yen has broken support at $0.009.
FOMC Minutes
FOMC minutes will be released at 2:00 pm ET. This is often a market moving event.
India
Rating agency Fitch maintains negative out look for India’s banking sector. Ironically, Indian stocks recovered on this negative news from prior day’s losses caused by government crackdown on black money.
Markets
Our very, very short-term early stock market indicator is negative. Stocks are resilient in the face of strong durable orders data.
Interest rates are ticking up and bonds are falling.
Gold futures are at $1193, silver futures are at $16.25, and oil futures are $47.57.
S&P 500 resistance levels are 2200, 2222 and 2250; support levels are 2180, 2165, and 2150.
DJIA futures are down 14 points.
STOCK TRIFECTA, CROSS CURRENTS IN GOLD AND MEXICO, HOT METALS
This is what you need to know today.
Trifecta
Dow Jones Industrial Average, S&P 500 and Nasdaq closed higher to a trifecta of new highs.
Gold
There are cross currents in gold market.
Physical demand in India continues to weaken. There is also the overhang of a potential import ban from India. An import ban may decimate gold.
On the positive side, a switch in polls in Italy ahead of December 4th referendum is lending support to gold.
Depending upon the data, there is potential of a very, very short-term trade from the long side in ZYX Buy.
The plan is to reduce net short positions in ZYX Short.
On balance the data is not strong enough to support a medium to long-term buy in ZYX Allocation. Those who always want some gold in the portfolio may continue to hold 3 – 5% of precious metals.
Mexico
It appears that instead of withdrawing from NAFTA, Trump is likely to push for modifications. These rumors are leading to select buying in Mexico by smart money.
Several ways of buying Mexican stocks at a discount are on our radar. If buy signals materialize, they will be in ZYX Emerging.
Hot Metals
Chinese day traders are running up industrial metals again. Iron ore and steel went up by their daily limits in China. Copper is climbing for a second day in a row.
Oil
Momentum from yesterday is being tempered ahead of API data later today. For liquidity reasons we have switched over to January contract.
Popular oil ETFs UWTI and DWTI are set to be terminated. We will no longer use them. For the time being, the plan is to use UCO and SCO.
Markets
Our very, very short-term early stock market indicator is neutral but expect the market to open higher. Bulls will attempt to take advantage of low liquidity during the holiday week to run the market higher.
Bonds, interest rates and currencies are mostly range bound.
Gold futures are at $1213, silver futures are at $16.72, and oil futures are $45.00.
S&P 500 resistance levels are 2200, 2222 and 2250; support levels are 2180, 2165, and 2150.
DJIA futures are up 44 points.
ITALY’S REFERENDUM IS THE NEXT BIG RISK AHEAD, PUTIN RUNS OIL, NONSENSICAL PRONOUNCEMENTS FROM WALL STREET
This is what you need to know today.
Italian Referendum
Italians will vote on a constitutional referendum on December 4th. If approved, there will be the most extensive reforms in the Italian government since the end of monarchy. Italian Prime Minister Matteo Renzi is the architect of the referendum. For months the polls have been in the ‘yes’ camp and the consensus continues to be a ‘yes’. However, four polls published on Friday show the ‘no’ camp is leading.
After Brexit and Trump, it is simply not prudent to 100% believe the polls or the consensus.
Indirectly if Renzi loses, it may start a sequence of events leading to disintegration of the Eurozone. There are three opposition parties in Italy, all favor exiting euro.
At least in theory, if the ‘no’ camp wins, it should have a major negative impact on the U. S. stock market, and major positive impact on U. S. bonds and dollar. In plain English, you could wake up on December 5th to see complete reversal of trends in place since Trump’s election.
Putin Runs Oil
A statement from Russian President Putin is running up oil. Putin said he saw no obstacles to an OPEC agreement and Russia is willing to freeze production.
Nonsensical Pronouncements
Wall Street firms are competing with each other to see who can be more bullish. They are all piling on the bullish side and in the process making nonsensical pronouncements. Beware! Stay disciplined with our approach that has proven itself under all market conditions.
Markets
Our very, very short-term early stock market indicator is neutral but expect stocks to open higher. Expect bulls to take advantage of lower liquidity this week to attempt to run S&P 500 to a new high.
Gold, silver, bonds, interest rates and currencies are range bound.
Gold futures are at $1214, silver futures are at $16.64, and oil futures are $47.59.
S&P 500 resistance levels are 2200, 2222 and 2250; support levels are 2165, 2150, and 2132.
DJIA futures are up 21 points.
WHAT TO DO NOW
Looking ahead and not only in the rear view mirror, consider continuing to hold existing core portfolio positions. Based on individual risk preference, consider 27 – 38% of assets in cash or treasury bills, and short to medium-term hedges of 25% and very short term hedges of 5%.
You are receiving less than 2% of the content from our paid services …TO RECEIVE REMAINING 98%, TAKE A FREE TRIAL TO PAID SERVICES.
Please click here to take advantage of a FREE 30 day trial.
Check out our enviable performance in both bull and bear markets.
