WEEKLY MARKET DIGEST: 400 MILLION PEOPLE NOW ON LOCKDOWN IN CHINA, STRONG JOBS REPORT $DIA $GLD $QQQ $SLV $SPY $TBT $USO

WEEKLY MARKET DIGEST: 400 MILLION PEOPLE NOW ON LOCKDOWN IN CHINA, STRONG JOBS REPORT $DIA $GLD $QQQ $SLV $SPY $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.

STRONG JOBS REPORT, 400 MILLION PEOPLE NOW ON LOCKDOWN IN CHINA

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

Strong Jobs Report

Non-farm Private Payrolls came at 206K vs. 155K consensus.

Average hourly earnings came at 0.2% vs. 0.3% consensus.

Coronavirus

Until yesterday, the data coming out of China was showing that the rate of growth of coronavirus infections had slowed.  The new data is calling into question the prior data that came out of China.  Here are the two key points:

  •  Now there are 400 million people under lockdown.  If the rate of virus spread has slowed, such a huge increase in the number of people of lockdown does not make sense.
  • The number of new cases being reported is staying around 3,000.  In the data released last night the expectations were the number of new cases would go down.  Also a question is being asked, “Why is the number of new cases about the same every day?”  It could be limited diagnostic capacity.  It could be that the government has decided to keep the number of new cases reported around 3,000.

Due to the foregoing, there is concern about the virus creeping up in the stock market again.

Momo Crowd And Smart Money In Stocks

The momo crowd is selling stocks in the early trade. Smart money is also lightly selling.

Gold

The momo crowd is buying gold.  Smart money is inactive.

For longer term, please see gold and silver ratings.

Oil

Russia has reportedly refused to reduce oil production.  This is bearish.

The momo crowd is selling oil.  Smart money is inactive.

For longer term, please see oil ratings.

Marijuana

ACB is a  major Canadian marijuana company.  ACB CEO has resigned.  Massive job cuts are underway.  Capital expenditures are being slashed.  The balance sheet is in bad shape.

ACB is causing very negative sentiment among marijuana stocks.

The momo crowd is selling marijuana stocks.  Smart money is inactive.

Technical Patterns

Biotechs are tracing a hanging man.  This is bearish.  ETF of interest is IBB.

This is powerful information and many investors use this to enter trades in addition to our official signals.  Here are the three most common uses: 1) Short-term trades in ETFs  2) Decisions to trim or add to long-term positions, and 3) New option trades. These should be used judiciously only in conjunction with macro, fundamental and quantitative indicators.  To learn more please click here.

Markets

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

Gold futures are at $1571, silver futures are at $17.74, and oil futures are $50.24.

S&P 500 resistance levels are  3360 and 3400; support levels are 3300, 3288 and 3256.

DJIA futures are down 124 points.

CHINA CUTS TARIFFS, CORONAVIRUS BUY SIGNAL

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

China Cuts Tariffs

China will cut tariffs on $75 billion of U. S. goods in half.  This is creating bullishness in stocks.

Coronavirus Buy Signal

At The Arora Report we had designed an algorithm to give a buy signal when the rate of spread of coronavirus slowed.  Doesn’t that seem logical? The algorithm is giving a buy signal today.

Jobless Claims

Initial claims came at 202K vs. 218K consensus.  Lower the number, stronger the economy.

Momo Crowd And Smart Money In Stocks

The momo crowd is aggressively buying stocks.  Smart money is lightly selling into the strength.

Gold

The momo crowd is buying gold.  Smart money is inactive.

For longer term, please see gold and silver ratings.

Oil

The momo crowd is acting like a yo-yo in oil. Smart money is inactive.

Russia and Saudi Arabia seem to be having difficulty in reaching an agreement for production cut.  This is bearish for oil.  However, Russia in the past has been known to change on a dime.

For longer term, please see oil ratings.

Marijuana

There is no discernable momo crowd or smart money activity in marijuana.

Technical Patterns

None of note.

This is powerful information and many investors use this to enter trades in addition to our official signals.  Here are the three most common uses: 1) Short-term trades in ETFs  2) Decisions to trim or add to long-term positions, and 3) New option trades. These should be used judiciously only in conjunction with macro, fundamental and quantitative indicators.  To learn more please click here.

Markets

Our very, very short-term early stock market indicator is neutral but expect the market to open higher.  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 stronger.

Gold futures are at $1568, silver futures are at $17.83, and oil futures are $50.70.

S&P 500 resistance levels are  3360 and 3400; support levels are 3300, 3288 and 3256.

DJIA futures are up 94 points.

REDUCE HEDGES AND CASH, WEAK HANDS FLUSH, CORONAVIRUS BREAKTHROUGH AND LOVE FOR TRUMP ADDING FUEL TO THE FIRE

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

Reduce Cash And Hedges

Please see the ‘What To Do Now’ section below.

ADP

ADP employment change came at 291K vs. 160K consensus.  This is a very strong number and causing bullishness in the stock market.

Fuel To The Fire

After a brief pause, bulls in the stock market are running rampant again. A flush out of weak hands, coronavirus breakthrough, Iowa chaos and love for Trump are adding fuel to the bullish fire. Let’s examine with the help of a chart.

The Chart

Please click here for an annotated chart of S&P 500 ETF (SPY). Similar conclusions can be drawn from the charts of Dow Jones Industrial Average (DJIA), ETF (DIA) and Nasdaq 100 ETF (QQQ).

Note the following:

  • VUD indicator is the most sensitive measure of net supply demand in real time. On the chart, VUD indicator is shown with orange when there is net selling and with green when there is net buying.
  • Focus on the big orange area in the lower pane towards the right hand side on the chart.
  • Notice that the big orange spike occurred right at the bottom in the stock market.
  • Notice the highest VUD indicator green spike before the stock market started falling.
  • Notice the difference in the magnitude of the green and orange areas marked on the chart.
  • The sum total of the foregoing is that the weak hands have been flushed out. Usually after the weak hands are flushed out, there is a strong two to three day rally.

Earnings Season

Earnings season is in full swing. Among the big-cap popular tech stocks, Amazon (AMZN), Apple (AAPL) and Microsoft (MSFT) reported stellar earnings. However Google (GOOG) (GOOGL) and Facebook (FB) reported less than stellar earnings. Keep in mind that in this market ‘bad news’ is ‘good news’.

Semiconductors have been leading indicators. Intel (INTC) and Western Digital (WDC) reported stellar earnings. AMD (AMD) reported less than stellar earnings.

Tesla (TSLA) experienced a massive short squeeze after game changing good earnings.

Coronavirus Breakthrough

A team led by Li Lanjuan, one of the leading scientists in China, is reporting a breakthrough in the treatment of coronavirus. Two drugs, Abidol and Darunavir, have been shown to inhibit the coronavirus in vitro. Stock futures jumped on the news.

Iowa chaos

The chaos in Iowa about reporting results from the caucus continues to add to the bullishness in the stock market. If Democrats can’t even manage technology to report results in a small state, they possibly cannot beat Trump who has a massive data machine — so the story goes.

Love for Trump

The stock market loves Trump. Democrats did not like Trump’s State of the Union speech. However Wall Street is loving it.

Momo Crowd And Smart Money In Stocks

The momo crowd is aggressively buying stocks.  Smart money is lightly selling into the strength.

Gold

The momo crowd is selling gold.  Smart money is inactive.

For longer term, please see gold and silver ratings.

Oil

The momo crowd is buying oil.  Smart money is inactive.  However, keep in mind that API came at 4.18M barrels build vs. 2.8M barrel build consensus. This data is bearish.

For longer term, please see oil ratings.

Marijuana

The momo crowd is buying marijuana stocks.  Smart money is inactive.

Technical Patterns

None of note.

This is powerful information and many investors use this to enter trades in addition to our official signals.  Here are the three most common uses: 1) Short-term trades in ETFs  2) Decisions to trim or add to long-term positions, and 3) New option trades. These should be used judiciously only in conjunction with macro, fundamental and quantitative indicators.  To learn more please click here.

Markets

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

Gold futures are at $1558, silver futures are at $17.61, and oil futures are $50.87.

S&P 500 resistance levels are  3360 and 3400; support levels are 3300, 3288 and 3256.

DJIA futures are up 237 points.

CORONAVIRUS SPREADS BUT AGGRESSIVE BUYING ON IOWA CHAOS AND MONEY PRINTING

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

Coronavirus

The coronavirus continues to spread.  Cases now top 20,600. The previous number was 17,000.  The death toll rises to 425.

Iowa Chaos

The stock market has decided to ignore the risk of coronavirus because it got such  good news from Iowa.  The Democratic party in Iowa was set to announce the caucus winner last night.  As of this writing, there are no results over ‘inconsistencies’.

The stock market is interpreting Iowa chaos as great news.  If Democrats cannot even manage a caucus in a small state, how are they going to beat Trump?  The stock market loves Trump.

Money Printing

The stock market is giddy about money printing in the aftermath of coronavirus.

Momo Crowd And Smart Money In Stocks

The momo crowd is aggressively buying stocks.  Smart money is lightly selling in to the strength.

Gold

The momo crowd is aggressively selling gold.  Smart money is inactive.

For longer term, please see gold and silver ratings.

Oil

The momo crowd is acting like a yo-yo in oil.  Smart money is inactive.

For longer term, please see oil ratings.

Marijuana

There is no discernable momo crowd or smart money activity in marijuana.

Technical Patterns

None of note.

This is powerful information and many investors use this to enter trades in addition to our official signals.  Here are the three most common uses: 1) Short-term trades in ETFs  2) Decisions to trim or add to long-term positions, and 3) New option trades. These should be used judiciously only in conjunction with macro, fundamental and quantitative indicators.  To learn more please click here.

Markets

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

Gold futures are at $1566, silver futures are at $17.64, and oil futures are $51.41.

S&P 500 resistance levels are  3300, 3360 and 3400; support levels are 3256, 3223 and 3200.

DJIA futures are up 341 points.

CORONAVIRUS IS NO MATCH FOR MONEY PRINTING IN THE STOCK MARKET BUT FOR HOW LONG?

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

Coronavirus And Money Printing

Coronavirus has now clearly become a pandemic. The number of reported cases and death toll keeps on rising.

To support its stock market, China cut reverse repo rates and injected massive liquidity. None of this helped Chinese stock market from a rout. However, the liquidity injection in China has helped the stock market in the United States.

There is extensive speculation that China will inject more liquidity. If that is not enough there is speculation of more money printing by central banks across the world. There is even talk of an interest rate cut by the Federal Reserve.

Can money printing reverse the economic damage from coronavirus? Can money printing continue to take stocks to new highs? Let’s explore with the help of two charts.

Two Charts

Please click here for a chart showing Federal Reserve’s assets.

Please click here for an annotated chart of the Dow Jones Industrial Average ETF (DIA) which tracks the Dow Jones Industrial Average (DJIA). Similar conclusions can be drawn from S&P 500 ETF (SPY) and Nasdaq 100 ETF (QQQ).

For the sake of full transparency, both charts were previously published and nothing has been changed since the publications.

Note the following:

  • The first chart shows a dramatic rise in the Federal Reserve’s assets since last year.
  • Since the Fed started printing more money, the U. S. stock market has risen in lockstep with the Fed’s balance sheet.
  • The conclusion is unmistakable that the money the Fed is printing is going into stocks, especially in large cap stocks such as Apple (AAPL), Amazon (AMZN), Facebook (FB), Google (GOOG) (GOOGL) and Microsoft (MSFT).
  • The second chart shows the support zone in the stock market.
  • The second chart shows RSI divergence. In plain English, this means that the internal momentum of the stock market was declining while the prices were going up. Such a development often is a precursor to a decline in the stock market.
  • The second chart shows Arora signal to raise cash and hedges to protect up to 63% of the long term portfolios given prior to the recent drop in the stock market.
  • The chart also shows a signal to short sell Nasdaq 100 ETF QQQ for a short term trade given prior to the recent drop in the stock market. For those who could not short, a signal was given to buy inverse ETF (SQQQ); this ETF goes up when the stock market goes down.
  • The most important point to note on the second chart is the support zone. In theory, the stock market should have fallen to the support zone on the news of coronavirus. But the stock market has held up because of the general belief that central banks will print more money or engage in other ways to inject liquidity in the markets.
  • Semiconductors have been a leading indicator. These are early signs of loss of momentum in popular semiconductor stocks such as AMD (AMD), Micron (MU), NVIDIA (NVDA) and Applied Materials (AMAT).
  • In our analysis at The Arora Report, China’s use of energy may drop by about 20% in the short term. We took a short position in oil ETF (USO) before the drop. For those who could not short, a signal was given to buy inverse oil ETF (DWT). The situation is negative for popular oil stocks such as Apache (APA), Exxon (XOM) and Chevron (CVX).

Coronavirus And SARS

I am getting a large number of emails from investors comparing coronavirus to SARS (Severe Acute Respiratory Syndrome). SARS occurred in 2003 and did not have much of an impact on the stock market. Investors should note that there are significant differences between 2003 and now.

  • Coronavirus is occurring after a 10 year bull market. SARS occurred when the market was beginning to recover from the 2000 crash.
  • Coronavirus is occurring when the stock market is very overbought. This was not the case with SARS.
  • The Chinese economy was much smaller in 2003.
  • Travel has dramatically increased since 2003.
  • Over the last few years, China has been the engine of global growth.
  • Before coronavirus, the Chinese economy was growing at slowest rate in 29 years.
  • In our analysis, China’s GDP will likely take at least 1% hit.

What Does It All Mean?

Coronavirus is a novel virus. Not enough is known about how the virus mutates, how it reproduces and how it spreads. It is simply prudent to be cautious and not rely on comparison with SARS. In our analysis at The Arora Report, the money printing has its limits. If the virus spreads, money printing may not be as effective as is generally believed by investors.

Caution does not mean an overall sell signal for good long term positions. We are providing precise levels of cash, hedges, which positions to trim and new opportunistic short term trades. The foregoing combination is prudent based on what is known so far.

Momo Crowd And Smart Money In Stocks

The momo crowd is aggressively buying stocks in the early trade. Smart money is inactive.

Gold

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

For longer term, please see gold and silver ratings.

Oil

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

As stated above, in our analysis at The Arora Report, China’s energy use is likely to drop by 20% in the short term.  This equates 3M barrels.  OPEC is talking about an emergency cut in production of 500K barrels.

For longer term, please see oil ratings.

Marijuana

There is no discernable smart money or momo crowd activity in marijuana.

Technical Patterns

None of note.

This is powerful information and many investors use this to enter trades in addition to our official signals.  Here are the three most common uses: 1) Short-term trades in ETFs  2) Decisions to trim or add to long-term positions, and 3) New option trades. These should be used judiciously only in conjunction with macro, fundamental and quantitative indicators.  To learn more please click here.

Markets

Our very, very short-term early stock market indicator is negative but expect the market to open higher.  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 stronger.

Gold futures are at $1583, silver futures are at $17.79, and oil futures are $51.61.

S&P 500 resistance levels are  3256, 3288 and 3300; support levels are 3223, 3200 and 3143.

DJIA futures are up 139 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 holding cash or treasury bills 22% – 32% and short to medium-term hedges of  0% – 15% and short term hedges of 5% – 10%.

 

A knowledgeable investor would have turned $100,000 into over $1,000,000 with the help from The Arora Report. 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, TAKE A FREE TRIAL TO PAID SERVICES.

Please click here to take advantage of a FREE  30 day trial.

Check out our enviable performance in both bull and bear markets.

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