WEEKLY MARKET DIGEST: TRUMP’S FIRST JOBS REPORT SOLID, GOLD STOPS HUNTED, OIL FALL CALLS STOCK RALLY IN QUESTION $DIA $GLD $QQQ $SLV $SPY $TBF $TBT $USO

  WEEKLY MARKET DIGEST: TRUMP'S FIRST JOBS REPORT SOLID, GOLD STOPS HUNTED, OIL FALL CALLS STOCK RALLY IN QUESTION $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.

TRUMP’S FIRST JOBS REPORT SOLID, GOLD AND OIL STOPS HUNTED, KOREAN PRESIDENT REMOVED

This is what you need to know today.

Trump’s First Jobs Report

After strong ADP report, Trump’s first official jobs report was expected to be solid.  Non-farm Private Payrolls came at 227K vs. 185K consensus.

Average Hourly Earnings came at +o.2% vs. +0.2% consensus.

Average Work Week came at 34.4 vs. 34.4 consensus.

Gold, Oil And Silver Stops Hunted

Gold and silver continue to be mostly populated with the momo crowd.  The momo crowd is not known for sophistication or deep study.  Over the years the momo crowd continues to repeat the same mistakes and professionals continue to eat their lunch.  The momo crowd put their stops in gold right under $1200 and then right under $1195.  Professionals know this behavior.  This morning they took out these stops driving gold down to $1194.5.  Of course after the stops are taken out professionals are running up gold prompting the momo crowd to buy again as gold crosses $1200 to the upside.  Of course professionals are selling into the strength.

Similar behavior is being seen in silver.  This morning stops were taken out under $17 and then $16.90 as silver dipped to $16.86.  Of course after the stops were taken out professionals are driving silver higher.  The momo crowd is panicking and buying silver again as silver crosses $17 to the upside.  Professionals are selling into the strength.

Similar behavior has occurred in oil.

The ‘smart money’ is inactive.

Professionals are in the business of picking up pennies whereas the smart money wants at least a few dollars.

Korean President Ousted

In an unprecedented move, President Park of South Korea has been ousted after the constitutional court of the country upheld her impeachment.

A new election must be held within 60 days.  Our insight here is that the likely front runner in the election, Moon Jae-in, is likely to be friendlier towards China and North Korea.  This will make dealing with North Korea and China more difficult for Trump.

Markets

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

Even after a strong jobs report, interest rates are ticking down and bonds are moving up.  Prior move in bonds was overdone.

Dollar is slightly weaker even after a strong jobs report.  The prior move in dollar was overdone.

Copper is rebounding after recent losses.

Gold futures are at $1201, silver futures are at $17.01, and oil futures are $49.90.

S&P 500 resistance levels are 2400, 2450 and 2500; support levels are 2363, 2334, and 2300.

DJIA futures are up 87 points.

OIL FALLS BRINGING CURRENT STOCK RALLY INTO QUESTION

This is what you need to know today.

Oil

The big news is that oil has fallen on supply glut. We will do a separate post later.

Reflation Trade

Reflation trade which is in part responsible for the present stock rally is being questioned.  Most commodity prices are falling. We will cover this in a later post in more detail.

ECB

ECB keeps rates unchanged and maintains its bond buying program even though inflation has been flaring up.  However the latest fall in oil may reduce inflation expectations.

Gold

Gold is under pressure in sympathy with oil.

Markets

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

Gold futures are at $1207, silver futures are at $17.25, and oil futures are $49.37.

S&P 500 resistance levels are 2400, 2450 and 2500; support levels are 2334, 2300, and 2288.

DJIA futures are down 2 points.

BLOWOUT ADP NUMBER, GOLD HIT ON ADP, OIL HIT ON API, TRUMP TO MEET CUMMINGS

This is what you need to know today.

Blowout ADP Number

ADP is the largest private payroll processor in the United States.  It uses its data to provide a picture of employment growth ahead of the official numbers from the Department of Labor to be released on Friday.

ADP came at 298K vs. 180K consensus.  This is a blowout number indicating strong job creation.  Job creation is now at the highest level in the last three years.

Gold Hit On ADP

Gold has been hit hard on blowout ADP number.  ADP number shows prosperity is breaking out and gold does not like it.  Expect gold to have strong support in the zone of $1188 to $1202.  It is trading around $1207 as of this writing.

Oil Hit On API

API shows U. S. crude inventories rising 11.6 million barrels vs. consensus of 1.7 million barrels.  Oil is being hit hard on these numbers.

EIA, which is considered more authoritative, will release its inventory number at 10:30 am ET.

Trump To Meet Cummings

Elijah Cummings of Maryland is the highest ranking Democrat on the House Committee on Oversight and Government Reform.  Cummings has long been a critic of high drug prices.  Trump tweeted again yesterday about high drug prices.   It will be interesting to see what comes out of today’s meeting.

As a full disclosure, ZYX portfolios have short positions on pharmaceuticals via stocks, ETFs, or inverse ETFs.

Markets

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

Dollar is stronger.

Bonds are ticking down and interest rates are ticking up.

Gold futures are at $1207, silver futures are at $17.32, and oil futures are $52.36.

S&P 500 resistance levels are 2400, 2450 and 2500; support levels are 2334, 2300, and 2288.

DJIA futures are up 32 points.

TRADE DEFICIT HIGHEST SINCE 2012, OBAMACARE LITE, GOLD UNDER PRESSURE AND OIL SUPPORTED

This is what you need to know today.

Trade Deficit Highest Since 2012

U. S. trade deficit increased to $48.5 billion, the highest level since March 2012.  Trump is likely to use this data to say that he has been right about trade.

Obamacare Lite

House Republicans have come up with replacement for Obamacare.  Conservative Republicans are calling it Obamacare Lite.  There are many implications for investors.  We will be addressing those in separate posts as appropriate.

Gold Under Pressure

Gold is under pressure as momo crowd is licking its wounds from buying near the highs in this swing.  At least for today the momo crowd is not supporting gold by its buying.  The ‘smart money’ is inactive.  So far the downdraft is simply a drift down.

Oil Supported

Oil is supported by two factors.  First, there are more clashes in Libya.  Second, Iraq and Angola have expressed willingness to extend OPEC oil production ceiling pact.

Copper

We have previously told you about selling in copper.  The data today shows that there is the biggest inflow of copper in 15 years to warehouses managed by London Metal Exchange.

As a full disclosure, ZYX Short has a short position in copper.

Markets

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

Interest rates are ticking up and bonds are ticking down.

Currencies are range bound.

Gold futures are at $1220, silver futures are at $17.59, and oil futures are $53.75.

S&P 500 resistance levels are 2400, 2450 and 2500; support levels are 2363, 2334, and 2300.

DJIA futures are down  29 points.

TRUMP WIRETAP, RATE HIKE ODDS, CHINA WARNING AND GOLD SUPPORTED

This is what you need to know today.

Trump Wiretap

Over the weekend, Trump alleged that Obama wiretapped him while he was running for president.  There are serious implications for investors.  We will do a separate post later.

Rate Hike Odds

After Yellen and Fischer speeches, many respected gurus are now assigning 100% odds to a rate increase in March.  At The Arora Report, we are assigning 90% probability at this time.  A lot depends on the jobs report that will be released this Friday.  If the report is strong, the odds in our analysis will also go up.

China Warning

China is holding National People’s Congress in Beijing.  Premier Li Keqlang has warned of profound changes in international politics as rising protectionism challenges globalization.  He set a growth target around 6.5%.

The insight here is that over 50% of S&P 500 companies derive significant international revenues.  If globalization comes under further attack in actions beyond rhetoric, earnings may suffer.  If earnings suffer, the rosy stock market scenario that most investors are believing these days will be at risk.

Gold Supported

Gold is supported by Trump allegations and North Korean saber rattling.  North Korea fired four ballistic missiles into the ocean.

Oil

Lower growth rate in China caused selling in oil.  As of this writing oil is moving back up again on reports of clashes in Libya.  Libya is an oil exporter.

Markets

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

Yen strengthened on North Korean ballistic missiles firing.

Euro weakened earlier on French presidential politics but is strengthening as of this writing on a short squeeze.

Copper is under pressure on lower China growth target.

Bonds are ticking up and interest rates are ticking down on lower China growth target.

Gold futures are at $1233, silver futures are at $17.91, and oil futures are $53.25.

S&P 500 resistance levels are 2400, 2450 and 2500; support levels are 2363, 2334, and 2300.

DJIA futures are down 56  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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