WEEKLY MARKET DIGEST: AGGRESIVE BUYING IN STOCKS AND OIL, TAX REFORM, FED CHAIR $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.

IGNORE WEAK EMPLOYMENT REPORT, REACTION TO THE TAX PLAN

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

Ignore Employment Report

In the all-important employment report, October Non-farm Private Payrolls came at 252K vs. 307K consensus. This data is extraordinarily weak.

Our analysis is that this is likely to be an anomaly due to hurricanes and should be ignored.

Reaction To The Tax Plan

Initial reaction by the market to the tax plan was negative but the momo crowd aggressively bought the dip and continues to buy this morning in the early trade. The ‘smart money’ is inactive.

Gold

Gold is being supported by weak employment report.

Technical Patterns

Several industrial stocks are tracing an Engulfing Line. This is bullish.  The ETF of interest is XLI.

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.

Bonds, interest rates, currencies and oil are range bound.

Gold futures are at $1277, silver futures are at $17.14, and oil futures are $54.70.

S&P 500 resistance level is 2615; support levels are 2550, 2500 and 2450.

DJIA futures are up 35  points.

POWELL TO BE THE FED CHAIR, TAX REFORM, BOE RAISES INTEREST RATES

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

Powell

President Trump plans to nominate Jerome Powell as the next Fed chair.    Markets think that Powell will largely continue Yellen’s policies.

Tax Reform

The tax plan is likely to be unveiled today.

Bank Of England

Bank of England has raised its interest rates for the first time in over 10 years.

Stocks

Stocks are being bought on Powell appointment and tax plan prospects.  The ‘smart money’ is inactive.

Gold, Bonds And Dollar

There is buying in gold and bonds as Powell is deemed dovish.

Dollar is being sold on Powell being dovish.

Oil

EIA data was not as supportive of oil as prior API data.  Oil fell on EIA data but is seeing aggressive buying by the momo crowd this morning.

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.

Gold futures are at $1277, silver futures are at $17.16, and oil futures are $54.31.

S&P 500 resistance level is 2615; support levels are 2550, 2500 and 2450.

DJIA futures are up 20 points.

AGGRESSIVE MOMO BUYING IN STOCKS, GOLD, OIL AND BONDS; ADP DATA AND THE FED DAY

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

Aggressive Momo Buying

The momo crowd is aggressively buying stocks, gold, oil and bonds in the early trade.  The smart money is inactive.

Stocks

This being the first of the month, new money is coming into the stock market.  There is also continued optimism over the tax reform.

Gold

The historical pattern of the momo crowd is to buy ahead of the Fed statement. This is exactly what they are doing this morning.

Oil

API data showed inventory draws in crude, gasoline and distillates much larger than the consensus.  This is the reason behind heavy buying in oil.

EIA data will be released at 10:30 am and may reverse the gains in oil if the data does not show big inventory draws.

ADP

ADP is the largest private payroll processor in the United States.  It provides a glimpse of the employment picture ahead of the official numbers that will be released on Friday.

ADP employment change came at 235K vs. 215K consensus.

The Fed Day

The Fed will release its statement at 2:00 pm ET. No change in interest rates is expected.  We will be paying careful attention to clues for a December rate hike.

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.

Gold futures are at $1277, silver futures are at $16.93, and oil futures are $54.96.

S&P 500 resistance level is 2615; support levels are 2550, 2500 and 2450.

DJIA futures are up 133 points.

TAX REFORM DETAILS MOVING THE MARKET, INFLATION SLOWS IN EURO AREA

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

Tax Reform

Tax reform details are moving the markets.  There is a report that reduction in corporate tax may be phased in over five years.  Stock market first did not like this report and the stocks dropped. The momo crowd aggressively bought on the drop and continues to aggressively buy this morning. The smart money is inactive.

Inflation Slows In Euro Area

Unexpectedly inflation in euro area slowed.  Annual inflation rate slowed to 1.4% vs. 1.5% consensus.

Core inflation dropped to 0.9% vs. 1.1% consensus.

Euro is weak and the dollar is stronger on this data.

Gold

Trading in gold is listless.  Geopolitical and macro data is negative for gold.  However there is some buying by the momo crowd.  The smart money is inactive.

Oil

Oil continues to see aggressive buying by the momo crowd.

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.

Interest rates are slightly ticking up and bonds are slightly ticking down.

Gold futures are at $1273, silver futures are at $16.78, and oil futures are $54.08.

S&P 500 resistance level is 2615; support levels are 2550, 2500 and 2450.

DJIA futures are up 31 points.

WASHINGTON ON EDGE ABOUT INDICTMENTS BUT LIKELY NO EFFECTS ON THE MARKETS, EURO AREA CONFIDENCE SURGES

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

Washington On Edge

Washington is on edge about indictment of Paul Manafort, Trump’s ex-campaign chairman.   In our analysis, this is not likely to have a major impact on the markets.  Markets will be affected only if Mueller strikes at the heart of the Trump administration.

Tax Reform

Tax reform is moving on track potentially for a release of a draft this week.

New Fed Chairperson

Trump may announce a new Fed chairperson this week.  This may be a market moving event.  Powell seems to be the front runner.

Euro Area Confidence At 17 Year High

The Index of Industry and Consumer Sentiment in Europe rose to 114 vs. 113.3 consensus.   This is a 17 year high.

Gold

Gold had moved up Friday on the potential of the situation in Catalonia worsening.  However, Spain has taken full control of Catalonia.  Gold is losing support because of Catalonia but new buying is coming in due to indictments in Washington.

Oil

The momo crowd is aggressively buying oil.

Personal Income And Spending

Personal Income came at 0.4% vs. 0.3% consensus.

Personal Spending came a 1% vs. 0.8% consensus.

In the U. S., this data shows that both personal income and spending are strong.

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.

The dollar is slightly weaker.

Interest rates are ticking down and bonds are ticking up.

Gold futures are at $1271, silver futures are at $16.71, and oil futures are $54.09.

S&P 500 resistance level is 2615; support levels are 2550, 2500 and 2450.

DJIA futures are down 61  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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