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.’
AGGRESSIVE BUYING ON THE TINIEST CORONAVIRUS DIP
To gain an edge, this is what you need to know today.
Please click here for a chart of S&P 500 futures.
Note the following:
- We usually use ETFs because many investors are not comfortable with futures.
- The futures chart is being used because futures trade all night.
- The chart shows selling in the futures after the regular market close for two reasons.
- The first reason was closures due to coronavirus
- The second reason was the Treasury wanting the unused money back from the Fed for certain loan programs.
- The chart shows the selling encased by a rectangle on the left-hand side.
- The momo crowd bought the dip.
- The chart shows aggressive buying encased by a rectangle on the right-hand side.
- The VUD indicator is the most sensitive measure of net supply demand in real-time. The orange is net supply and the green is net demand.
- The VUD indicator on the chart shows persistent net demand for stock futures overnight.
- Pfizer (PFE) is submitting an application for the vaccine to the FDA. This news was already discounted in the market price by everyone with the exception of the momo crowd. But discounting that takes analysis. The momo crowd is not known for analysis. They are buying on the headlines.
Momo Crowd And Smart Money In Stocks
The momo crowd is🔒 (To see the locked content, please take a 30 day free trial) stocks in the early trade. Smart money is🔒 inactive.
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 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 $1867, silver futures are at $24.31, and oil futures are $41.70.
S&P 500 futures resistance levels are 3600, 3630 and 3800: support levels are 3520, 3460 and 3420.
DJIA futures are down 37 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.
MORE MONEY PRINTING AND MORE GOOD NEWS SAVES THE STOCK MARKET
To gain an edge, this is what you need to know today.
More Money Printing
Please click here for a chart of S&P 500 ETF (SPY) which represents stock market benchmark index (SPX).
Note the following:
- At the close yesterday, there was a good setup for the stock market to drop. The probability was high for the drop to be about 5%.
- This morning two new pieces of good news have saved the stock market from falling, at least temporarily.
- European Central Bank President Lagarde is stating that there will be a big monetary stimulus package in December. In plain English, this means large money printing is coming from the ECB next month. Of course, the momo crowd loves money printing.
- There is additional good news on vaccine. The University of Oxford confirms that the vaccine being developed with AZN produced a strong immune response in the elderly. The concern has been that the vaccine may not work well for the elderly.
- The chart shows that yesterday the market closed at the magnet line. This morning it is likely to open slightly below the magnet line.
- The chart shows that so far, due to the twin good news, there is no technical damage to the stock market.
Jobless Claims
Initial Jobless Claims came at 742K vs. 720K consensus. Even though the data is slightly worse than the consensus, due to volatility in this number, it should be considered in line.
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 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 $1858, silver futures are at $23.89, and oil futures are $41.98.
S&P 500 futures resistance levels are 3600, 3630 and 3800: support levels are 3520, 3460 and 3420.
DJIA futures are down 72 points.
THE STOCK MARKET ‘TELL’ FROM MORE GOOD NEWS ON VACCINE AND BOEING’S 737 UNGROUNDED
To gain an edge, this is what you need to know today.
Tepid Reaction
Please click here for a chart of S&P 500 ETF (SPY) which represents stock market benchmark index (SPX).
Note the following:
- Many investors watch the news that moves the markets.
- Intelligent investors go one step further — they know that often the reaction to the news in the stock market is more important than the news for analyzing their investments.
- There are two pieces of good news. Pfizer (PFE) and BioNTech (BNTX) have announced that their vaccine is 95% effective. This is much better than the data previously disclosed and slightly better than the data from Moderna (MRNA).
- Vaccines are often less effective in older people. For example, those over 65 are given a stronger dose of flu vaccine. One concern about the coronavirus vaccines has been if they would work for older adults. PFE vaccine is 94% effective in older adults. However, as of this writing, we do not have access to the data to verify this claim.
- There is good news on Boeing (BA) 737 Max plane. The FAA is ungrounding the plane. BA is a member of Dow Jones Industrial Average (DJIA). BA stock is up strongly. (Those holding SPR from an earlier signal have about doubled their money in a month; SPR is a manufacturer of fuselage, propulsion and wing systems — the signal was given in anticipation of the news that is being released today. SPR is now reaching the prior target zone but the target is now being raised.)
- As of this writing, the reaction to double good news is tepid.
- The chart shows vaccine high.
- The chart shows that the market is staying above the magnet line but below the vaccine high line.
- In theory, the market should break the vaccine high line decisively based on the recent behavior of the momo crowd. The market may yet do so later in the day or in the week.
- If the market does not break decisively above the vaccine high, this will be a concern and may lead to a very, very short term sell signal.
Housing Starts
Housing Starts came at $1.53M vs. $1.44M consensus.
Housing Permits came at $1.55M vs. $1.55M consensus. Housing permits are a leading indicator.
The data shows that the housing market is still red hot.
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 data showed a build in crude inventories of 4.174M barrels vs. consensus of 1.95M barrels. API data is bearish but there is buying in the oil market in anticipation of OPEC action.
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 $1877, silver futures are at $24.48, and oil futures are $42.16.
S&P 500 futures resistance levels are 3630, 3800 and 4000: support levels are3600, 3520 and 3460.
DJIA futures are up 106 points.
TWO SIMILARITIES TO 1928 BEFORE THE CRASH BUT IT IS DIFFERENT THIS TIME
To gain an edge, this is what you need to know today.
Similarities 1928
Please click here for a shart of S&P 500 ETF (SPY) which represents stock market benchmark index (SPX).
Note the following:
- The most important observation from the chart is that yesterday after the good vaccine news, the stock market failed to rocket higher.
- As of this writing, this morning, the stock market is hovering around the magnet line.
- The bull’s expectations were that the stock market would have decisively broken above the magnet line yesterday.
- Since the March 23rd low, this market has been ‘good news is great news and bad news is good news.’
- Yesterday, there was great news and the market treated it as just good news.
- At least temporarily, there appears to be a change in the character of the market as explained above.
- In November 2020, S&P 500 has been up over 10%.
- The only other November where the market was higher in November was in 1928 when it was up 11.99%.
- 2020 is very different from 1928. However, there are two noticeable similarities.
- In 1928, the market was up strongly in November as explained above. Further, the general belief was that the stock market only goes up and if there were to be a drop it would be brief.
- Now the general belief is the stock market only goes up and if it were to drop, the drop will be brief.
- In 1929, the market crashed.
- This time it is different because the whole government machinery and Wall Street are geared to not letting the market go down.
- This time is still the same as in 1928 because human nature in terms of greed and fear has not changed.
Retail Sales
Retail Sales Ex-auto came at 0.2% vs. 0.6% consensus. In previous months, retail sales have been very strong. We have been sharing with you our projection that this was likely to slow. That projection is now spot on.
Industrial Production
Industrial Production came at 1.1% vs. 0.9% consensus.
Capacity Utilization came at 72.8% vs. 72.3% consensus.
Momo Crowd And Smart Money In Stocks
The momo crowd is 🔒 stocks in the early trade. Smart money is🔒.
Gold
The momo crowd and smart money are 🔒 in gold in the early trade.
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 $1889, silver futures are at $24.69, and oil futures are $40.80.
S&P 500 futures resistance levels are 3600, 3630 and 3800: support levels are 3520, 3460 and 3420.
DJIA futures are down 265 points.
94.5% EFFECTIVE VACCINE, LARGEST TRADE DEAL SIGNED — BAD FOR U. S. A.
To gain an edge, this is what you need to know today.
Vaccine And Trade Deal
Please click here for a chart of S&P 500 ETF (SPY) which represents stock market benchmark index (SPX).
Note the following:
- Previously there was good news on the vaccine from Pfizer (PFE) and BioNTech (BNTX).
- Now there is more good news from Moderna (MRNA). MRNA vaccine is 94.5% effective. Moreover, this vaccine does not need the extreme cold temperatures required by PFE vaccine.
- China has scored a major success by persuading 14 Asia-Pacific nations to sign its trade deal.
- The U. S. has been left out of the trade deal.
- The China trade deal is a big positive for China and a big negative for the U. S. A.
- The chart shows the stock market reaction to the vaccine news.
- Notice that this time the reaction is mild compared to the last vaccine news. This indicates that market participants were expecting this good news and most of this news was already discounted.
- As of this writing, the market is above the line marked ‘Magnet’ on the chart.
- Overall the pattern that is being traced is positive.
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 up and bonds are ticking down.
The dollar is slightly 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 $1882, silver futures are at $24.50, and oil futures are $41.79.
S&P 500 futures resistance levels are 3630, 3800 and 4000: support levels are 3600, 3520 and 3460.
DJIA futures are up 438 points.
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