WEEKLY MARKET DIGEST: AGGRESSIVE SELLING IN STOCKS DUE TO FALL IN TURKISH LIRA $DIA $GLD $QQQ $SLV $SPY $TBT $USO

WEEKLY MARKET DIGEST: AGGRESSIVE SELLING IN STOCKS DUE TO FALL IN TURKISH LIRA $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.

AGGRESSIVE SELLING IN STOCKS DUE TO FALL IN TURKISH LIRA

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

Fear Of Contagion

U. S. stocks are being aggressively sold this morning on fear of contagion from the fall of the Turkish lira.  President Erdogan of Turkey offered no credible solution in his speech earlier today.

Trump Pours Gasoline On The Fire

A few minutes ago Trump made the situation worse by stepping up tariffs on Turkey.  Now the U. S. will impose 50% tariff on Turkish steel and 20% on aluminum.

Inflation

Core Consumer Price Index (CPI) came at 0.2% vs. 0.2% consensus.  This indicates that inflation is finally heating up and investors need to be more risk averse than in the past.  Please pay attention to the ‘What To Do Now’ section below.

Momo Crowd And Smart Money In Stocks

The momo crowd is aggressively selling in the early trade.  The smart money is inactive.  You may recall that approaching this point, at various times smart money lightly sold into the strength.

Chart Pattern

Please click  here  for the chart we provided you yesterday.  Yesterday S&P 500 came a hair close to the prior high and backed off from the resistance shown on the chart. Today it is backing off further.  We will have to watch and see if a double top pattern develops.

Turkey

In the long run the country of Turkey is not going to disappear.  There is wisdom to an old saying, ‘Buy when there is blood in the streets.’   Not long ago ETF TUR was touching $47.13.  It is trading at $20.71 as of this writing in the pre-market.

Gold

In theory gold should have moved up on developments in Turkey.  In stead the momo crowd is selling gold.

The smart money is lightly buying gold.

Oil

Trading in oil is listless.

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 can swing positive if there are positive rumors about Turkey.

The dollar is stronger.

Money is flowing from stocks into bonds.

Bonds are moving higher and interest rates are coming down.

Gold futures are at $1220, silver futures are at $15.40, and oil futures are $67.33.

S&P 500 resistance levels are 2860 and 2918; support levels are 2800, 2765 and 2740.

DJIA futures are down 165 points.

CHART SAYS PAY ATTENTION TO THE CRITICAL MARKET JUNCTURE, DOUBLE TOP OR OFF TO THE RACES

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

Double Top?

These days it is fashionable for analysts to say that they base their analysis on fundamentals and not on charts. The chart is at such a critical juncture that even such analysts may want to take a look at the chart.

Please click here for an annotated chart of S&P 500 ETF (SPY). Please note the following from the chart:

  • The market is right up against the resistance as shown on the chart.
  • The volume is low. Based on traditional technical analysis this is negative.
  • Over the recent years, I have repeatedly noted that when the volume is low on an approach to the resistance, significant volume often comes in after the breakout. The reason is that after the breakout, the momo crowd becomes aggressive. Based on this observation, these days the traditional technical analysis should not be strictly applied.
  • The chart shows that there is a potential double top if the market turns down from here. A double top is considered a negative pattern.
  • The chart shows that when the market was at this level last time, RSI was overbought.
  • The chart shows that this time RSI can go either way.
  • The pattern looks different for Dow Jones Industrial Average (DJIA), Nasdaq 100 ETF (QQQ) and small cap ETF (IWM).

Let us start with Arora’s Second Law of Investing, ‘No one knows with certainty what is going to happen next.’ The indication from market leaders such as Amazon (AMZN), Apple (AAPL), Facebook (FB), Google (GOOG) (GOOGL) and other popular stocks such as AMD (AMD) is that the probability of a break to the upside is high.

Investors should not make decisions based only on the chart and look at a more comprehensive model with a proven record in both bull and bear markets such as ZYX Global Milti Asset Allocation Model with 10 inputs. Please click here to see the 10 inputs. Further, markets are dynamic and static models do not work over a long period. ZYX Global Multi Asset Allocation Model is adaptive in that it changes itself with market conditions. Please click here to see how it changes itself.

Tame Inflation

Core PPI came at 0.1% vs. 0.2% consensus.

Initial Claims

Initial Claims came at 213K vs. 220K consensus.

Momo Crowd And Smart Money In Stocks

The momo crowd is buying in the early trade.  The smart money is inactive.

Gold

Trading in gold is listless.

Oil

There is a big bull and bear fight going on in oil.

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 can swing either way.

Currencies, bonds and interest rates are range bound.

Gold futures are at $1223, silver futures are at $15.46, and oil futures are $67.16.

S&P 500 resistance levels are 2860 and 2918; support levels are 2840, 2800 and 2765.

DJIA futures are up 19 points.

OHIO SPECIAL ELECTION SHOWS THERE IS POLITICAL RISK TO THIS STOCK MARKET

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

Ohio Shows Risk

We are politically agnostic.  Our sole purpose is to help our subscribers make money.  Normally we stay away from politics.  However when politics start impacting the making of money, it is our job to bring it to your attention.

A special election has just been held in a traditionally safe GOP House seat. The Republican candidate is leading with a razor thin majority.  This indicates that Democrats may mount a serious challenge in the upcoming November election. Democrats need to gain 23 seats to control the House.  There are 68 seats that are held by the GOP and where the voting patterns are better for Democrats compared to Ohio.

Right now the market is ignoring the November election, but November is not too far away.  If Democrats gain strength, the stock market may not like it.

Consider paying attention to the ‘What To Do Now’ section below.  This is not the time to be overly aggressive in the stock market.

Momo Crowd And Smart Money In Stocks

The momo crowd is buying stocks in the early trade.  Buying is especially strong in smaller popular momo crowd stocks such as MTCH, ALRM, LITE, CARG and AAOI.

The smart money sold into the strength yesterday but is inactive this morning.

Gold

Trading in gold is listless.

Oil

API inventory data was very bullish for oil.  API reported a draw of 6 million barrels vs. consensus of a draw of 3.3 million barrels. In theory oil should have moved up but instead selling came into the market. The reason is that the short squeeze appears to be ending.

EIA data will be released at 10:30 am ET and is likely to be a market mover.

Technical Patterns

Home builders are tracing a Diamond Bottom.  This is bullish.  ETF of interest is ITB.

Chinese stocks are tracing an Island Bottom.  This is bullish.  ETFs of interest are FXI and ASHR.  In our analysis this is a bear market rally.

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 can quickly swing positive.

Currencies, interest rates and bonds are range bound.

Gold futures are at $1214, silver futures are at $15.29, and oil futures are $68.16.

S&P 500 resistance levels are 2860 and 2918; support levels are 2840, 2800 and 2765.

DJIA futures are down 26 points.

OPTIMISM ON BIG CHINESE STOCK AND OIL RALLY

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

Chinese Stock Rally

The sentiment about stocks has become optimistic this morning on Chinese stocks jumping 2.7% in Shanghai.  The trigger is speculation of new government spending to stimulate the economy.  This is the biggest jump in Chinese stocks in two years.

Before you get excited about Chinese stocks like the momo crowd is doing this morning, take a look at this simple fact. Before the rally, in dollar terms, Mainland Chinese stocks were down 36%. With such a carnage the market was very oversold.  The present rally is a bounce  from the very oversold condition in a bear market.

Momo Crowd And Smart Money In Stocks

The momo crowd is aggressively buying. The buying is especially strong in small cap technology stocks such as TWLO and ETSY.  The smart money is lightly selling the same stocks into the strength  that the momo crowd is buying.

Gold

Gold is seeing light buying as the dollar weakens.

Oil

In Shanghai oil was bid limit up. This is causing a lot of optimism in oil markets.  Some of this optimism is spilling into the stock market as oil stocks are likely to rally. Please see the Technical Patterns below.

Yesterday we shared with you the reinstatement of sanctions against Iran.  Iran is a major oil producer. However we expect much of the Iranian oil to continue to flow to India and China circumventing the sanctions.

Technical Patterns

Many oil exploration stocks are tracing a Symmetrical Continuation Triangle. This is bullish.  ETF of interest is XOP.

Brazilian stocks are tracing an Inside Bar.  This is bearish.  The ETF of interest is EWZ.

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.

The dollar is weaker.

Interest rates and bonds are range bound.

Gold futures are at $1221, silver futures are at $15.44, and oil futures are $69.63.

S&P 500 resistance levels are  2860 and 2918; support levels are 2840, 2800 and 2765.

DJIA futures are up 107 points.

SANCTIONS ON IRAN AND CHINA TRADE WAR

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

Iran Sanctions

Some sanction on Iran are going into effect today.  Iran is responding with military exercises. This is increasing the risk for investors.

China For The Long Haul

China is saying that they are not going to back down in the trade war with Trump and they are in it for the long haul.

Momo Crowd And Smart Money In Stocks

The momo crowd is buying in the early trade. The smart money is lightly selling.

Gold

Gold is under selling pressure due to the stronger dollar.

Oil

Oil is moving up on Iran sanctions.

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 can easily swing either way.

Interest rates are ticking down and bonds are ticking up.

The dollar is stronger.

Gold futures are at $1215, silver futures are at $15.31, and oil futures are $69.13.

S&P 500 resistance levels are 2840, 2860 and 2918; support levels are 2800, 2765 and 2740.

DJIA futures are down 7 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  10% – 15% and very short term hedges of 15%.

 

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.

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