WEEKLY MARKET DIGEST: A NEW BIG NEGATIVE FOR THE BULLISH STORY IN STOCKS, GOLD AND OIL $DIA $GLD $QQQ $SLV $SPY $BTC.X $TBT $USO

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WEEKLY MARKET DIGEST: A NEW BIG NEGATIVE FOR THE BULLISH STORY IN STOCKS, GOLD AND OIL $DIA $GLD $QQQ $SLV $SPY $BTC.X $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.

A NEW BIG NEGATIVE FOR THE BULLISH STORY IN STOCKS, GOLD AND OIL

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

New Big Negative

A new big negative for the bullish story in stocks, gold and oil.

There is a reason that the jobs report is called the mother of all numbers.  The jobs report just released is extremely disappointing.  Non-farm private payrolls came at 146K vs. 185K consensus.  Normally, this would have caused stocks and oil to plunge and gold to skyrocket; from a rational analysis, such movements make sense.  Instead, the momo crowd is aggressively buying stocks and oil but aggressively selling gold.  The momo crowd is not known for its analysis. Let us see how the day develops.

Normally interest rates should have fallen and bonds should have risen. Instead there is not much movement.

Normally the dollar should have fallen.  Instead the dollar is ticking up.

Technical Patterns

European stocks are tracing a Continuation Diamond.  This is bullish.  The ETF of interest is FEZ.

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.

Gold futures are at $1320, silver futures are at $17.24, and oil futures are $61.45.

S&P 500 resistance level is 2740; support levels are 2700, 2688, and 2661.

DJIA futures are up 68 points.

DOW 25,000 MAGNET, MOTHER OF ALL NUMBERS AHEAD, FED IN LINE

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

Dow 25,000 Magnet

Dow 25,000 is acting like a magnet for the momo crowd. The momo crowd is buying aggressively in the early trade.  The smart money is lightly selling into the strength.

Mother Of All Numbers

Tomorrow’s employment report is the mother of all numbers and may be a market moving event.

In advance, ADP employment change came at 250K vs. 190K consensus.

Initial jobless claims came at 250K vs. 240K consensus.

This means that the employment picture remains strong.

Fed In Line

Fed minutes were in line with the consensus.

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Oil

API showed a draw of 4.992 million barrels vs. consensus of a draw of 3 million barrels.  This is leading to aggressive momo buying in oil.  However more authoritative EIA data will be released later today.

Gold

The momo crowd continues to aggressively buy gold.  The lower dollar is also helping gold.

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 but can reverse quickly.

Interest rates are ticking down and bonds are ticking up.

The dollar is weaker.

Gold futures are at $1316, silver futures are at $17.23, and oil futures are $61.74.

S&P 500 resistance level is 2740; support levels are 2700, 2688, and 2661.

DJIA futures are up 110 points.

AGGRESSIVE BUYING IN STOCKS, GOLD AND OIL AHEAD OF FED MINUTES

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

Fed Minutes

FOMC minutes will be released at 2:00 pm ET. We will be reading the tea leaves for the number of rate increases in 2018.  Markets will move if the new information is different from the consensus.  The consensus is for three rate increases.

Stocks

The momo crowd is aggressively buying stocks in the early trade.  The smart money is inactive.  The smart money seems to be cautious about the Fed minutes.  The momo does not care about Fed minutes and is simply buying on the momentum from yesterday.

Iron Ore

Iron ore prices are rallying in China.  The reason is that China had shut down some steel factories due to pollution.  The expectation is that as these factories come back on line, demand for iron ore will increase.

It never makes sense but historically steel stocks such as X, AKS, NUE and STLD move up with higher iron ore prices.  Iron ore is the raw material for making steel.  In reality the cost to steel producers goes up when iron ore prices go up and in the long term it is negative for steel stocks.  Further in the United States, steel producers are buying iron ore on long-term contracts and buying them on iron ore prices in China is kind of silly but that is exactly what investors are doing.

Gold

The momo crowd is aggressively buying gold ahead of the Fed minutes in line with the historical pattern.  There is a possibility of a short squeeze in gold if the Fed minutes are more dovish than the consensus.  A short squeeze can lead gold much higher.

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On the flip side the smart money is inactive.

Oil

The momo crowd is aggressively buying oil hoping it will decisively break out of the resistance.  Oil has resistance at $60.74. As of this writing oil is trading at $60.80 above the resistance.

On the flip side, the smart money is selling on up spikes.  The move in oil started on unrest in Iran.  The Iranian government seems to be successfully clamping down the protests.

Technical Patterns

Several semiconductor stocks are tracing a Continuation Triangle.  This is bullish. The ETFs of interest are SMH and SOXX.  Please note that there is a fundamental counterpoint here.  INTC has a heavy weight.  A flaw has been discovered in INTC processor design.

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 but it can reverse quickly.

Interest rates are ticking down and bonds are ticking up.

Currencies are range bound.

Gold futures are at $1317, silver futures are at $17.22, and oil futures are $60.80.

S&P 500 resistance levels are 2700 and 2740; support levels are 2688, 2661, and 2631.

DJIA futures are up 51 points.

NEW MONEY POURING INTO STOCKS BUT BEWARE OF POSTPONED SELLING, GOLD CALL SPOT ON, OIL UP ON IRAN

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

New Money Pouring In

During the first few days of a new year, new pension money and money from bonuses pours into the stock market.  Professional traders are running up stocks in the early trade as they want to front run the new money that may come in later in the day.

Beware that a lot of selling that would have normally occurred in 2017 was postponed into 2018 because of the tax reform. At some point there will be a battle between this selling and new money coming in.

Gold Call Spot On

On Thursday when gold was trading at $1294, we wrote in the Morning Capsule,

$1300 is the next resistance which will act like a magnet for the momo crowd.  As the day progresses, the momo crowd may start aggressively buying gold to run it to $1300.Please also be aware that short sellers have their stops in $1300 to $1310 zone.   If the momo crowd runs gold to $1300, hunt and destroy algorithms may kick  in to take out the stops and in the process move gold to around $1310.

This call has proven spot on.  Exactly what we predicted has happened.

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In the process, there is a positive technical pattern in gold.  Please scroll down to ‘Technical Patterns’ section.

Oil

There is new unrest in Iran.  Several people were killed during the weekend.  Trump is trying his best to stoke the fire against the Iranian government.

Iran is a major oil exporter.  Oil and natural gas are being bought by the momo crowd on Iranian unrest.

Natural gas continues to move higher on colder weather.  However it is not a great trade set up for a trade from the long side because natural gas is overbought and if a new warmer weather forecast comes in, it will fall quickly.  It is also not a great set up from the short side because a massive short squeeze can start here.

Technical Patterns

Gold is tracing an Inverse Head And Shoulders Pattern.  This is bullish.  ETF of interest is GLD.  This is a longer term pattern compared to the patterns that are typically published in this section.

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 but can turn negative very quickly.

Interest rates are ticking up and bonds are ticking down.

Currencies are range bound.

Gold futures are at $1315, silver futures are at $17.16, and oil futures are $60.26.

S&P 500 resistance levels are 2688, 2700 and 2740; support levels are 2661, 2631, and 2615.

DJIA futures are up 108 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 19% – 29% and short to medium-term hedges of  15% – 25% and very short term hedges of 15%.

 

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