WEEKLY STOCK MARKET DIGEST: INVESTORS GET READY FOR $3 TRILLION INFRASTRUCTURE PLAN

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 ‘Protection Bands and What To Do Now.’

NASDAQ BELOW THE NECKLINE

To gain an edge, this is what you need to know today.

Nasdaq Below The Neckline

Please click here for a chart of    Nasdaq 100 ETF ().

Note the following:

  • The chart shows that Nasdaq is once again below the neckline.
  • So far, Nasdaq is tracing the classic pattern.
    • A Head and shoulder pattern is formed.
    • Investors rush in to buy the dip running the market above the neckline.
    • The rally fails right at or near the resistance. This is the case this time as shown on the chart.
    • Price falls back and tests the neckline and then rallies again as shown on the chart.
    • The rally again fails at or near the resistance.
    • The failure leads to a break of the neckline.
  • A majority of the time, but not always,  the above pattern leads the price lower.
  • Yesterday the market was saved by the excitement over Biden wanting to borrow over $3 trillion more dollars for infrastructure.  Please click here for the chart that tells the story.
  • The Fed and Biden will do everything they can to stop the market from falling by putting more air in the stock market bubble.  So far, the Fed, Trump and Biden have succeeded.
  • In our analysis, infrastructure spending in the U. S. is needed for the long term good of the country. The issue for investors is that politicians think of borrowing and money printing as a free lunch.  In the short term, this is positive for the stock market but in the long term, it is a big negative. 
  • Biden will try to frame the infrastructure package as deficit-neutral and to be paid by higher taxes.  The reality is likely to be far different from the rhetoric in the following ways.
    • Borrowing will take place quickly.
    • Tax revenues over the next 10 years will be used to justify.
    • Tax revenues will likely pay only a part of the borrowing.
  • There is likely to be a huge opportunity to make money from infrastructure spending.

Personal Income

Personal Income came at -7.1% vs. -7.0% consensus.

Personal Spending came at -1.0% vs. -0.6% consensus.

PCE Prices

PCE Prices came at 0.2% vs. 0.3% consensus.

Momo Crowd And Smart Money In Stocks

The momo crowd is 🔒 (To see the locked content, please take a 30 day free trial)  stock in the early trade. Smart money is 🔒.

Gold

The momo crowd is 🔒 gold in the early trade.  Smart money is 🔒.

For longer-term, please see gold and silver ratings.

Oil

The momo crowd is 🔒 buying oil in the early trade.  Smart money is 🔒.

For longer-term, please see oil ratings.

Markets

Our very, very short-term early stock market indicator is 🔒.  This indicator, with a great track record, is popular among long term investors to stay in tune with the market and among short term traders to independently undertake quick trades.

Interest rates are ticking up and bonds are ticking down.

The dollar is weaker.

Trading futures is not recommended for most investors. The purpose of providing this information is to give an indication of the premarket activity that usually guides the activity when the market opens.

Gold futures are at $1723, silver futures are at $25.15, and oil futures are $59.93.

S&P 500 futures resistance levels are 3950, 4000 and 4200: support levels are 3860, 3770 and 3630.

DJIA futures are up 131 points.

Protection Bands and What To Do Now?

It is important for investors to look ahead and not in the rearview mirror.

Consider continuing to hold existing positions. Based on individual risk preference, on dips, consider holding 🔒 in cash or treasury bills or short-term bond funds or allocated to short-term tactical trades and short to medium-term hedges of 🔒 and short term hedges of 🔒. This is a good way to protect yourself and participate in the upside at the same time.

You can determine your protection bands by adding cash to hedges.  The high band of the protection is appropriate for those who are older or conservative. The low band of the protection is appropriate for those who are younger or aggressive.  If you do not hedge, total cash level should be more than stated above but significantly less than cash plus hedges.

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.

PANDEMIC LOW IN JOBLESS CLAIMS, BIDEN FREE MONEY GOING TO CHINA

To gain an edge, this is what you need to know today.

Jobless Claims

Please click here for a chart of initial jobless claims.

Note the following:

  • Initial Jobless claims is a leading indicator and carries heavy weight in the Asset Allocation Model we use for timing. This is an adaptive model i.e., it automatically changes with market conditions.  Most of the models on Wall Street are static models; they work under some market conditions and stop working when conditions change.
  • As shown on the chart, Weekly Initial claims came at 684K vs. 710K consensus.
  • This is a post-pandemic low.
  • The foregoing means that the economy is significantly improving and fewer people are filing for unemployment.
  • This great number has prompted a selloff in stocks in the early trade.  The reason is that this stock market bubble has been inflated with reckless money printing and reckless borrowing.  The concern is that if this number continues to improve at this rate, some politicians may dare to stand up and start opposing reckless money printing and borrowing.  If this scenario happens, where will more air come from to continue to inflate the stock market bubble?

GDP

Third Estimate came at 4.3% vs. 4.1% consensus.  This number is also showing that the economy has been getting better faster than expectations.  This is a lagging indicator.

Free Money To China

It turns out that about $100 billion of the new stimulus money will end up going to China.  Certainly, politicians did not intend to burden the U. S. taxpayers with heavy borrowing to send the money to China.  We will write more on the subject at a later time.

Momo Crowd And Smart Money In Stocks

The momo crowd is 🔒 stocks in the early trade.  Smart money is 🔒.

Gold

The momo is 🔒 gold in the early trade.   Smart money is 🔒.

For longer-term, please see gold and silver ratings.

Oil

The momo crowd is 🔒 oil in the early trade.  Smart money is 🔒.

For longer-term, please see oil ratings.

Markets

Our very, very short-term early stock market indicator is🔒.  This indicator, with a great track record, is popular among long term investors to stay in tune with the market and among short term traders to independently undertake quick trades.

Interest rates are ticking down and bonds are ticking up.

The dollar is  stronger.

Trading futures is not recommended for most investors. The purpose of providing this information is to give an indication of the premarket activity that usually guides the activity when the market opens.

Gold futures are at $1728, silver futures are at $24.65, and oil futures are $59.34.

S&P 500 futures resistance levels are 3950, 4000 and 4200: support levels are 3770, 3630 and 3600.

DJIA futures are down 161 points.

BUYING ON INTEREST RATES PULLING BACK

To gain an edge, this is what you need to know today.

Interest Rates Pulling Back

Please click here for a chart of 10-year Treasury bond ETF ().

Note the following:

  • The chart shows that  has moved above the breakdown line.
  • The chart shows the breakdown has entirely reversed itself.
  • The chart shows that there is some momentum to this move as shown by the RSI going above the recent upper band.
  • IEF moving up means interest rates are moving down.

Durable Orders

Durable Orders Ex-transportation  came at -0.9% vs. +0.6% consensus.  This number is weak but not of concern at this time.  Here are the reasons,

  • This is a very volatile series.  The Arora Report looks for a trend over a period of time.
  • January Durable Orders were very strong.

Momo Crowd And Smart Money In Stocks

The momo crowd is 🔒 stocks in the early trade.  Smart money is 🔒.

Gold

The momo crowd is 🔒 gold in the early trade.  Smart money is🔒.

For longer-term, please see gold and silver ratings.

Oil

API reported a build of 2.927M barrels vs. 2.72K barrels consensus.

The momo crowd is 🔒 oil in the early trade. Smart money is 🔒.

For longer-term, please see oil ratings.

Markets

Our very, very short-term early stock market indicator is 🔒.  This indicator, with a great track record, is popular among long term investors to stay in tune with the market and among short term traders to independently undertake quick trades.

Interest rates are ticking down and bonds are ticking up.

The dollar is stronger.

Trading futures is not recommended for most investors. The purpose of providing this information is to give an indication of the premarket activity that usually guides the activity when the market opens.

Gold futures are at $1732, silver futures are at $25.34, and oil futures are $59.41.

S&P 500 futures resistance levels are 3950, 4000 and 4200: support levels are 3860, 3770 and 3630.

DJIA futures are up 97 points.

WILL EVEN A SINGLE POLITICIAN DARE TO UPSET THE GRAVY TRAIN IN THE LONG TERM INTEREST OF AMERICA?

To gain an edge, this is what you need to know today.

The Gravy Train

Please click here for a chart of Nasdaq 100 ETF ().

Note the following:

  • The chart shows that the market is consolidating between the neckline and the resistance line.
  • A decisive break of one of these two lines can potentially lead to a major move.
  • A break of the neckline is bearish and a break of the resistance line is bullish.
  • In theory, a break today and tomorrow based on the testimony of Powell and Yellen should happen.  Even though the probability is low it should not be ignored.
  • Powell and Yellen’s testimony starts at noon.
  • There is no doubt that both Powell and Yellen will do their best to put more air in the stock market bubble.
  • There is a Q&A today and tomorrow as part of the testimony.
  • Here is the key question: Will even a single politician dare to ask questions in the long-term interest of America?
  • Politicians have tremendously benefited from the gravy train of reckless borrowing and money printing.  For this reason, the probability is low for politicians to ask the most important questions.  How will we pay back the debt? How will we handle the long-term adverse consequences of reckless money printing?

Pressure On Commodities

At a time when commodities seem to be a shelter from potential inflation, a significant move by China is causing downward pressure on commodity prices including oil.

It appears China plans to sell 500,000 tons of aluminum from state reserves to prevent the prices from rising.  The inference is that China may make similar moves in other commodities. 

Massive Borrowing

Results of an auction for the U. S. to borrow $60 billion for two years will be announced at 1:00 pm ET. This may be a market-moving event.

Stocks

The momo crowd is 🔒 stocks in the early trade. Smart money is 🔒.

Gold

The momo crowd is 🔒 gold in the early trade.  Smart money is 🔒.

For longer-term, please see gold and silver ratings.

Oil

The momo crowd is 🔒 in the early trade. Smart money is 🔒.

For longer-term, please see oil ratings.

Markets

Our very, very short-term early stock market indicator is 🔒.  This indicator, with a great track record, is popular among long term investors to stay in tune with the market and among short term traders to independently undertake quick trades.

Interest rates are ticking down and bonds are ticking up.

The dollar is stronger.

Trading futures is not recommended for most investors. The purpose of providing this information is to give an indication of the premarket activity that usually guides the activity when the market opens.

Gold futures are at $1738, silver futures are at $25.71, and oil futures are $59.17.

S&P 500 futures resistance levels are 3950, 4000 and 4200: support levels are 3860, 3770 and 3630.

DJIA futures are down 115 points.

POWELL AND YELLEN PUT MORE AIR IN THE STOCK MARKET BUBBLE

To gain an edge, this is what you need to know today.

More Air

Please click here for a chart of    Nasdaq 100 ETF () Yellen Powell

Note the following:

  • In a speech today and in front of Congress over the next two days, Powell will have opportunities to put more air in the stock market bubble. The expectation is that Powell will do so with full vigor.
  • Yellen will also be appearing before Congress. The expectation is that she will put more air in the stock market bubble as well.
  • Powell has indicated that he is not concerned about wild speculation in the stock market.  Powell is cut from a different cloth than any other Fed Chair in history.  All other Fed Chairs were concerned about speculation in the stock market and typically took steps to dampen such speculation.  The reason they did so is that they knew that wild speculation always ends badly.
  • The evidence in social media is building that the stimulus checks are being used to buy momo stocks and bitcoin.
  • Based on the foregoing, momo stocks should be roaring.
  • The chart shows that the momo stocks are not roaring in the early trade even though there is significant buying in momo stocks.
  • The chart shows that the market is consolidating between the neckline and the resistance line.
  • The reason the market is not roaring is that smart money keeps on selling into the strength.
  • We have previously written that there is a fair probability of the market being close to an inflection point.
  • The best way to understand an inflection point is to think in terms of a major battle ahead between the bulls and the bears and it is not clear which side will win.
  • Whichever side wins will determine the near-term direction of the market.

Momo Crowd And Smart Money In Stocks

The momo crowd is 🔒 stocks in the early trade.  Smart money is 🔒.

Gold

The momo crowd is 🔒 gold in the early trade.  Smart money is🔒.

For longer-term, please see gold and silver ratings.

Oil

The momo crowd is 🔒 oil in the early trade.  Smart money is 🔒.

For longer-term, please see oil ratings.

Markets

Our very, very short-term early stock market indicator is 🔒.  This indicator, with a great track record, is popular among long term investors to stay in tune with the market and among short term traders to independently undertake quick trades.

Interest rates are ticking down and bonds are ticking up.

The dollar is weaker.

Trading futures is not recommended for most investors. The purpose of providing this information is to give an indication of the premarket activity that usually guides the activity when the market opens.

Gold futures are at $1731, silver futures are at $25.61, and oil futures are $61.21.

S&P 500 futures resistance levels are 3950, 4000 and 4200: support levels are 3860, 3770 and 3630.

DJIA futures are down 41 points.

Markets can generate substantial wealth for knowledgeable investors. NOW YOU TOO CAN ALSO SPECTACULARLY SUCCEED AT MEETING YOUR GOALS WITH THE HELP OF THE ARORA REPORT. You are receiving less than 2% of the content from our paid services. …TO RECEIVE REMAINING 98% INCLUDING MANY ATTRACTIVE INVESTMENT OPPORTUNITIES,
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