(The Weekly Digest reproduces the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers. )
STOCKS TO GAIN AS YEN RALLY STOPS AND OIL MOVES UP
This is what you need to know today.
At least temporarily, stocks are set to gain as yen rally stops and oil moves up.
It appears that incessant selling in Japanese stocks by dollar based investors has exhausted itself. Japanese stocks rallied overnight. This has reduced buying of yen to take off hedges. Yen retreated overnight.
Oil is rallying on short covering ahead of the weekend. Oil producers will meet in Doha, Qatar on April 17th. Oil traders simply do not want to take the risk of being short over the weekend ahead of the meeting.
Yellen has boosted the sentiment by stating that the U. S. economy is not a bubble economy and the U. S. is near full employment.
Loonie is jumping as the probability of rate cuts in Canada dwindles.
Bonds are giving up most of the gains from yesterday.
Gold and silver are still elevated.
Our very, very short-term early stock market indicator is positive.
Gold futures are at $1235, silver futures are at $15.25, and oil futures are $39.33.
S&P 500 resistance levels are 2063, 2100, and 2111; support levels are 2038, 2017, and 2000.
DJIA futures are up 103 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 – 42%, and short to medium-term hedges of 30%.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash. When adjusting hedge levels, consider adjusting partial stop quantities for stock positions (non ETF); consider using wider stops on remaining quantities and also allowing more room for high beta stocks. High beta stocks are the ones that move more than the market.
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.
DIVISIONS WITHIN CENTRAL BANKS EXPOSED, BIG MOVES IN THE MARKETS CAUSED BY MISTAKEN BELIEFS OF THE MOMO CROWD WITH YEN LEADING
This is what you need to know today.
FOMC minutes were released yesterday afternoon. ECB minutes were released this morning. The minutes show that there are significant divisions within each of these two central banks. Such divisions highlight the difficulty in predicting the world economic growth and inflation. Both minutes also highlight that the world is so interconnected that neither central bank can act based mostly on its domestic economy.
In practical terms, the foregoing means that investors should hold enough cash and hedges during this period. Please see ‘What To Do Now?’ section below.
What Is Happening In The Markets?
Yen rises against dollar. Traditionally yen is considered a safe haven currency. The momo crowd has never been known for deep analysis. The momo crowd jumps on buying gold in response to yen rise thinking that if yen is rising, there is need for safe haven and gold should go up.
Treasuries look at yen rising and gold rising and respond by falling yields and higher bonds.
Equities look at higher bonds and in response either fall or rallies are subdued.
Actions of the momo crowd create bullish patterns from the charts. The markets are full of traders who trade either purely on technicals or claim to be fundamentalists but their knowledge is superficial and they are closet technicians. Such traders look at bullish patterns and jump on the buy side.
When the buying of the momo crowd and technical traders moves assets up, they pat themselves on the back for being right and buy more. This creates a self fulfilling prophecy.
The round robin continues.
The Real Reason For Yen Rise Is Not Safe Haven
The whole round robin in the markets is absurd because the real reason behind the yen rise is not safe haven.
Coming into March 2016, there was tremendous buying of Japanese stocks by dollar based investors. Such investors sold yen to hedge the currency risk. A lot of retail money flowed into currency hedged Japanese ETFs.
Now that in response to rising yen, Japanese stocks are falling, dollar based investors are aggressively selling Japanese stocks. Retail investors are aggressively selling currency hedged Japanese ETFs.
As Japanese stocks are sold, currency hedges are taken off by buying yen.
All this unwinding of hedges by buying yen is causing yen to rise. It has nothing to do with safe have demand.
When Will The Markets Wake Up To The Reality?
The markets will wake up to the reality causing huge losses for the momo crowd and technical traders when Smart Money decides that the absurdity has gone too far and steps in the opposite direction.
It is difficult to predict the timing. A big help in such predictions are our proprietary sentiment indicators.
Stay tuned.
Markets
Oil is range bound.
Gold, silver, bonds and yen are rocketing higher.
Our very, very short-term early stock market indicator is negative.
Gold futures are at $1241, silver futures are at $15.30, and oil futures are $37.35.
S&P 500 resistance levels are 2063, 2100, and 2111; support levels are 2038, 2017, and 2000.
DJIA futures are down 95 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 – 42%, and short to medium-term hedges of 30%.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash. When adjusting hedge levels, consider adjusting partial stop quantities for stock positions (non ETF); consider using wider stops on remaining quantities and also allowing more room for high beta stocks. High beta stocks are the ones that move more than the market.
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.
FOMC MINUTES ON TAP, GOOD ECONOMIC DATA AND STATEMENT FROM KUWAIT STABILIZES OIL
This is what you need to know today.
FOMC minutes will be released at 2:00 pm ET. This may be a market moving event.
The European Central Bank (EBC) will release its account of March meeting tomorrow.
China’s Services PMI came at 52.2 vs. 51 consensus.
German Industrial Production came at -0.5% vs. -1.0% consensus.
Japan’s Leading Index came at 99.8 vs. 100 consensus.
Kuwait’s OPEC governor said that a production freeze in oil may be agreed without Iran. Also API data came out bullish for oil. Oil has stabilized from its recent decline.
Safe havens of gold, yen, and Treasuries are giving up gains from yesterday.
Dollar is stronger.
Our very, very short-term early stock market indicator is neutral.
Gold futures are at $1221, silver futures are at $14.95, and oil futures are $36.61.
S&P 500 resistance levels are 2063, 2100, and 2111; support levels are 2017, 2000, and 1962.
DJIA futures are up 3 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 – 42%, and short to medium-term hedges of 30%.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash. When adjusting hedge levels, consider adjusting partial stop quantities for stock positions (non ETF); consider using wider stops on remaining quantities and also allowing more room for high beta stocks. High beta stocks are the ones that move more than the market.
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.
GLOBAL SELL OFF IN EQUITIES IN DELAYED REACTION TO PANAMA PAPERS, RAISING CASH AND HEDGE LEVELS
This is what you need to know today.
A global sell off in equities is taking place in delayed reaction to Panama Papers. Panama Papers refer to a massive leak from a Panamanian law firm that shows significant financial wrong doings by the world’s richest, powerful, and famous. Panama Papers show that many politically well connected people have been dodging taxes by hiding their wealth through Panamanian corporations. In many cases, the wealth of the rich and famous appear to be the result of corruption.
Various governments are reacting differently to the Panama Papers. Australia is starting an investigation. Prime Minister of Iceland is under pressure to resign. China denounces Panama Papers and limits the coverage of the issue by the media in China.
In our analysis, the negative effect of such a revelation is usually short lived. After all from the beginning of time, there have been both honest and corrupt people in the world. However the stock market is overbought and is not fully supported by fundamentals. For this reason, we are increasing the hedge and cash levels. Please see the section below titled ‘What To Do Now?’
The safe havens of gold, yen and Treasuries are moving higher.
Yen is especially strong and is hurting Japanese stocks.
Oil is drifting down. It is likely to test the support at $35. If that support is broken, the next major support zone is $32.50 to $33.10.
Our very, very short-term early stock market indicator is negative.
Gold futures are at $1232, silver futures are at $15.13, and oil futures are $35.47.
S&P 500 resistance levels are 2063, 2100, and 2111; support levels are 2017, 2000, and 1962.
DJIA futures are down 120 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 – 42%, and short to medium-term hedges of 30%.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash. When adjusting hedge levels, consider adjusting partial stop quantities for stock positions (non ETF); consider using wider stops on remaining quantities and also allowing more room for high beta stocks. High beta stocks are the ones that move more than the market.
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.
BASE METAL SHORT SQUEEZE IS OVER, EUROZONE UNEMPLOYMENT FALLS TO NEW LOW
This is what you need to know today.
The massive short squeeze in copper, zinc, nickel and lead is over. Copper touches a four-week low before rebounding. Now copper prices have fallen for seven straight days. As a full disclosure, ZYX Short Sell Change Alert has a short position in copper.
On a fundamental basis, the down draft in base metals tells us that investors continue to have serious concerns about growth in China. Shanghai market was closed for a holiday.
Eurozone unemployment fell to 10.3%, the lowest level since 2011. Unemployment in Germany is unchanged at 4.3%.
Oil continues on a downtrend after a statement from Saudi that they will not freeze oil production unless Iran agrees.
Dollar is weaker against euro and yen.
Interest rates and bonds are range bound.
In over seas action gold had fallen to $1216 before North American momo crowd started buying aggressively.
Our very, very short-term early stock market indicator is neutral.
Gold futures are at $1221, silver futures are at $15.04, and oil futures are $36.64.
S&P 500 resistance levels are 2100, 2111 and 2132; support levels are 2038, 2017, and 1909.
2200 2150 2132 2111 2100 2063 2038 2017 2000 1962 1920 1909 1900 1860 1838 1800 1767 1732
DJIA futures are down 2 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. When adjusting hedge levels, consider adjusting partial stop quantities for stock positions (non ETF); consider using wider stops on remaining quantities and also allowing more room for high beta stocks. High beta stocks are the ones that move more than the market.
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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