WEEKLY MARKET DIGEST: SMART MONEY INTO GOLD AHEAD OF ITALIAN REFERENDUM, OIL OVER $50 AND JOBS REPORT $DIA $GLD $QQQ $SLV $SPY $TBF $TBT $USO

  WEEKLY MARKET DIGEST: SMART MONEY STEPS INTO GOLD AHEAD OF ITALIAN REFERENDUM, OIL OVER $50 AND GOLDILOCKS JOBS REPORT $DIA $GLD $QQQ $SLV $SPY $TBF $TBT $USO

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.

GOLDILOCKS JOBS REPORT, RATE HIKE ODDS RISE, MONEY FLOWS OUT OF EUROPE INTO THE U. S., SMART MONEY STEPS INTO GOLD

This is what you need to know today.

Goldilocks Jobs Report

Non-farm Private Payrolls came at 156K vs. 170K consensus. Unemployment Rate came at 4.6% vs. 4.8% consensus.  Average Work Week came at 34.4 vs. 34.4 consensus.  Hourly Earnings came at -0.1% vs. +0.2% consensus.

This is a goldilocks report, not too hot and not too cold.

The Rate Hike

After this goldilocks report, consensus is approaching 100% for a rate hike in December.

Money Out Of Europe

Money is flowing out of Europe into the United States.  European stocks are falling.  The reason is the jitters before the Italian referendum.  As we have shared with you before, a ‘no’ outcome has a good shot.

Smart Money Steps Into Gold

In a rarity these days, smart money is lightly buying gold.  Perhaps the reason is to guard against a negative outcome in the Italian referendum. If the outcome is a ‘no’, gold can easily jump up $40 to $80.

In another rarity, the momo crowd is selling gold.  It appears that the reason for selling is that the momo crowd has incurred huge losses in gold and now they cannot take the pain.

Markets

Our very, very short-term early stock market indicator is neutral but the market has high potential for a major move to either side.

Interest rates are ticking down and bonds are ticking up.

Currencies and oil are mostly range bound.

Gold futures are at $1171, silver futures are at $16.47, and oil futures are $50.84.

S&P 500 resistance levels are 2200, 2222 and 2250; support levels are 2180, 2165, and 2150.

DJIA futures are down 16 points.

CHINA GOLD IMPORT RESTRICTIONS, OIL OVER $50, JOBS REPORT AND ITALIAN REFERENDUM AHEAD

This is what you need to know today.

China Gold Import Restrictions

After continuing to tighten gold import restrictions, China is now allowing some banks to use offshore currency accounts to import more gold.  This has brought down premiums in Shanghai from $40 to $20. In the very, very short-term, this is positive.  However with the exception of tactical moves to lower  the gold premium, expect China to strategically ratchet up restrictions on gold imports in the long-term.

November was the worst month for gold since 2013.

As a full disclosure, there are still large short positions in precious metals and miners that are 35% hedged with ETF GDX in ZYX Short.

Oil

Oil continues its march up and has now decisively broken resistance at $50.

Natural Gas

Natural gas has broken resistance at $3.40.  As a full disclosure, there are still positions in natural gas ETFs UNG and UGAZ in ZYX Buy.

Jobs Report

Jobs Report is often called the mother of all numbers.  It is often a market moving event.  It will be released at 8:30 am ET tomorrow.

Italian Referendum

The referendum in Italy is ahead  this Sunday.  As we have previously described, this is a major risk event.

Markets

Our very, very short-term early stock market indicator is neutral but expect the market to start out positive.

Interest rates are ticking up and bonds are falling.

Euro and pound are stronger but yen is weaker.

Gold futures are at $1170, silver futures are at $16.45, and oil futures are $50.92.

S&P 500 resistance levels are 2222, 2250 and 2288; support levels are 2180, 2165, and 2150.

DJIA futures are up 41 points.

OPEC CLOSE TO AN AGREEMENT, TRUMP CARRIER WIN

This is what you need to know today.

Oil

OPEC is close to reaching an agreement.  The agreement appears to be  1.4 million barrels cut from OPEC accompanied by 600K barrels non-OPEC cut.  The key to the agreement appears to be Saudi giving the concession to Iran to let Iran boost production to 3.9 million barrels.

Our ratings on oil are likely to change after more information becomes available.

In ZYX Buy, energy positions include RDS.B, HAL, and MRO.  There is also a natural gas position using UNG or UGAZ.  Conservative investors looking for a long-term oil position may want to focus on RDS.B.  Aggressive investors looking for a long-term oil position may want to focus on MRO.  We are looking to move upwards buy zones.  We are also looking to initiate new positions in high beta oil stocks such as OAS and CLR.

In ZYX Allocation, energy ETFs are OIH and FCG.  We are looking at raising the buy zones.

In ZYX Emerging, the focus is on Russia using ETF RSX.  Russia is the biggest non-OPEC oil producer.

Caution: Oil has moved up about 7% as of this writing but there is no guarantee that a final agreement will be reached.  Moreover OPEC has a tendency to cheat.  It is important to not rush in but be judicious and use proper risk controls.

Trump Carrier Win

During the campaign, Trump threatened Carrier with 35% duties on air conditioners brought to the United States from Mexico to prevent Carrier from moving a plant from Indianapolis to Mexico.

Carrier is a unit of UTX.  UTX is a large defense contractor.  After Trump’s election, UTX had no good choice but to appease Trump due to its defense business.

In a win for Trump, Carrier is agreeing to keep about 1000 jobs in Indianapolis.

Gold

Trading in gold is lack luster as physical demand in India continues to soften.  Momo crowd tried to rally gold but failed.

Markets

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

Yen is weaker but euro is stronger.

Interest rates and bonds are range bound.

Gold futures are at $1186, silver futures are at $16.70, and oil futures are $48.30.

S&P 500 resistance levels are 2122, 2250 and 2288; support levels are 2200, 2180, and 2165.

DJIA futures are up 41 points.

RUSSIA OUT OF OIL TALKS, GOOD ECONOMIC DATA, CHINA KILLS GOLD RALLY ATTEMPT

This is what you need to know today.

Russia Out Of Oil Talks

Tomorrow is the D-day when OPEC is supposed to come up with oil freeze or production cut.  There are reports that Russia has stepped out of oil talks. Oil has been in a free fall over the last couple of hours but is now finding support right above $45.

There will likely be many more rumors before tomorrow that will whipsaw oil traders.

In our analysis, oil has the potential to move $4 to $8 in either direction based on what comes out of Vienna.

Economic Data

Q3 GDP revised to 3.2% vs. 3% consensus.

Case-Schiller Housing Index came at 5.1% vs. 5.2% consensus.

China Kills Gold Rally

Gold was attempting a rally from very oversold levels.  Then came the news that China is strengthening capital controls to stem capital outflows.  This is negative for gold as the next step may be for China to restrict gold imports.  The news killed the budding gold rally.

Momo crowd is aggressively buying gold on this pullback and will likely try to rally it again.

Smart money is absent from gold and silver.

Dollar Warning

UBS, the giant Swiss bank that manages $2 trillion of wealth is predicting that yen will strengthen to 98 to the dollar.  What does yen do in response? Yen slapped UBS in the face and weakened approaching 113 to the dollar.

Natural Gas

We have switched over to January contract.  The resistance zone in this contract is $3.32 to $3.40.

Markets

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

Interest rates and bonds are range bound.

Base metals such as copper are being sold.

Gold futures are at $1184, silver futures are at $16.45, and oil futures are $45.32.

S&P 500 resistance levels are 2222, 2250 and 2288; support levels are 2180, 2165, and 2150.

DJIA futures are up 8  points.

LIMITS ON INDIVIDUAL GOLD HOLDINGS AVERTED, OIL RUMORS, BASE METALS ROCKET HIGHER, OECD BACKS TRUMP

This is what you need to know today.

Gold And Silver React To India, China And Dollar

At least temporarily, limit on how much gold individuals can hold has been averted in India.  This is a big deal as Indians hold lots of gold.  It appears that the government in India faced with difficulties in the aftermath of banning 500 and 1000 rupee notes is not in a position to take more controversial measures at this time.

Please note that the foregoing is separate and distinct from a ban of gold imports.   A gold import ban is likely to take a back seat right now as the government focuses on cash crunch in the economy after the demonetization.

Speculation on restriction on gold imports into China is easing.

Dollar is slightly backing off from its recent run.

The combined effect of the three items described above is a small relief rally in gold.

Overnight there has been aggressive buying in silver in China.

Oil Rumors

Oil had fallen close to $45 on Saudi cancelling a meeting with Russia prior to formal OPEC meeting on November 30th.  Oil came under further pressure on rumors that Iran was not cooperating.

As of this writing, oil has rallied above $47 on a report that Iraq is willing to consider production freeze in the interest of reaching an agreement.

Expect oil to stay very volatile based on rumors ahead of OPEC meeting.

Natural Gas

Natural gas is moving up further purely based on momentum and short covering after natural gas did not fall on somewhat bearish inventory data.

Base Metals

Chinese day traders continue to pour into base metals.  Somewhat longer term money is coming into commodities and out of real estate in China.

Zinc is up about 4%, copper is up about 1%, and lead is at its highest level since 2011.

OECD Backs Trump

The Organization for Economic Cooperation and Development (OECD), a prestigious intergovernmental organization with 35 member countries is backing Trump’s infrastructure plan.

Markets

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

Interest rates are ticking down and bonds are ticking higher.

Most currencies are slightly recouping their recent losses against the dollar.

Gold futures are at $1187, silver futures are at $16.66, and oil futures are $47.14.

S&P 500 resistance levels are 2288, 2250 and 2222; support levels are 2180, 2165, and 2150.

DJIA futures are down 61 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%.

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