WEEKLY MARKET DIGEST: ARORA CALL: SMART MONEY SOLD STOCKS INTO THE STRENGTH PRIOR TO THE FALL $DIA $GLD $QQQ $SLV $SPY $TBT $USO

WEEKLY MARKET DIGEST: ARORA CALL: SMART MONEY SOLD STOCKS INTO THE STRENGTH PRIOR TO THE FALL $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.

EUROZONE MANUFACTURING SLUMPS, WINDOW DRESSING AHEAD

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

Eurozone Manufacturing

Eurozone March Flash Manufacturing PMI came at 47.6 vs. 49.5 consensus.

Germany’s March Flash Manufacturing PMI came at 44.7 vs. 48.0 consensus.

A PMI number less than 50 indications contraction.

In plain English, this means that manufacturing is slumping in Europe.  We have previously written about the risk of a recession in Europe.

Investors should not ignore the risks from abroad affecting U. S. stocks.

Window Dressing Ahead

In window dressing, money managers run up their favorite stocks at the end of a quarter. This has been a very strong quarter. Expect money managers to try to run up best performing stocks going into next week.  Will they succeed?

Momo Crowd And Smart Money In Stocks

Smart money sold yesterday’s highs but is inactive this morning.  The momo crowd is buying.

Gold

Both momo crowd and smart money are inactive. Gold is range bound.

Oil

The momo crowd is selling oil in the early trade.  Smart money is inactive. Oil is backing off after crossing $60.

Marijuana

The momo crowd is buying marijuana stocks.  Smart money is lightly selling marijuana stocks.

Technical Patterns

Retail stocks are tracing an engulfing line. This is bullish.  ETF of interest XRT.

Energy stocks are tracing a head and shoulders bottom.  This is bullish.  ETF of interest is XLE.

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.

Bonds are moving higher and interest rates are moving lower.

Currencies are range bound.

Gold futures are at $1311, silver futures are at $15.42, and oil futures are $59.30.

S&P 500 resistance levels are 2860, 2918 and 2925; support levels are 2840, 2800 and 2765.

DJIA futures are down 171  points.

POST FED — ‘SELL THE NEWS’ REACTION IN STOCKS AND STRONG RALLY IN BONDS, CBD IN THE LARGEST DRUG STORE CHAIN

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

Sell The News

Stocks got more than what they wanted from the Fed.  So far they are experiencing ‘sell the news’ reaction.  Such reaction is common.

Strong Rally In Bonds

Bonds are experiencing a strong rally because the Fed is at max dovish.

There are concerns about the yield curve. However, the probability is very high that these concerns are misplaced. The reason is that Fed will be buying Treasuries and this artificially lowers the yield on the long end.

Gurus Justify

Gurus are justifying the sell off in stocks and the rise in bonds based on slowing earnings growth and the slowdown seen in some economic indicators.

None of the foregoing is a surprise to The Arora Report subscribers.  We have been sharing with you for a while ahead of Wall Street our analysis that earnings growth is slowing and global economic growth is slowing.  Now everyone is catching on.

Tariffs

Trump is talking about maintaining tariffs on Chinese goods as a way of enforcing any potential trade deal.  For the long term U. S. interests, this is an excellent strategy.  However, investors are myopic and do not like it.

Momo Crowd And Smart Money In Stocks

Yesterday  morning the momo crowd was aggressively buying stocks ahead of the Fed announcement. On the Fed announcement, the momo crowd became super aggressive in buying stocks.  Smart money aggressively sold into the up spike caused by super aggressive buying by the momo crowd.  When stocks turned down because of aggressive smart money selling, the momo crowd started selling.

Early this morning, the momo crowd was buying again but then smart money started selling again into the strength. Stocks started falling on smart money selling.  Then the momo crowd started selling.

As of this writing, smart money is inactive and the momo crowd is buying again.

Gold

Gold is being bought on max dovish Fed.  Gold likes low interest rates.  The momo crowd is buying gold.  Smart money is inactive.

Oil

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

Marijuana

CVS is selling CBD products, mostly for skin care and not edibles.  This is a major development since CVS is the largest drug store chain in the country.  The products are from CURLF.

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 neutral but can easily swing either way with much higher probability of becoming negative.

Interest rates are falling and bonds are rallying.

The dollar is weaker.

Gold futures are at $1316, silver futures are at $15.52, and oil futures are $60.02.

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

DJIA futures are down 61 points.

PRE-FED RALLY FIZZLES, WAIT FOR FED’S STATEMENT BEGINS

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

Pre-Fed Rally Fizzles

Historically stocks rally on the day before the Fed announcement.  Yesterday was no different in the morning but the rally fizzled in the afternoon.  Based on history, the rally should have strengthened in the afternoon.  The reason could be reports that China is shifting its stance and hardening it to get a guarantee that tariffs will be removed.

Fed Statement

The Fed statement will be released at 2:00 pm.  The press conference will begin at 2:30 pm.

Consider staying extra alert during this time in case there are opportunities.

Momo Crowd And Smart Money In Stocks

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

Gold

The momo crowd historically buys gold ahead of the Fed announcement.  Today is no different.  Smart money is inactive.

Oil

API data shows that crude inventories fell by 2.1 M barrels vs. consensus of a build of 309 K barrels.  The surprise draw has occurred two weeks in a row.  This is bullish for oil.

EIA data will be released at 10:30 am.

Both momo crowd and smart money are inactive.

Marijuana

Florida has ended the ban on smokable cannabis.  This will open up new opportunities.

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

The momo crowd aggressively bought TLRY on earnings but the rally fizzled as smart money sold into the strength.

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. It will depend on what the Fed says. Please see yesterday’s Morning Capsule.

Interest rates are ticking down and bonds are ticking up.

Currencies are range bound.

Gold futures are at $1308, silver futures are at $15.36, and oil futures are $67.94.

S&P 500 resistance levels are 2860, 2918 and 2925; support levels are 2800, 2765 and 2740.

DJIA futures are up 7 points.

THREE IMPORTANT INDICATIONS FROM THE FED AHEAD, OIL CUTS EXTENDED TO JUNE

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

Three Important Indications

The Fed meeting starts today.  The policy statement will be released tomorrow at 2:00 pm ET.  Here are the three important indications investors should be looking for:

  • The date when the Fed will stop shrinking its balance sheet.  In plain English, ‘shrinking balance sheet’ means when the Fed will stop taking the money out of the system that it previously created out of thin air.
  • The composition of the Fed’s balance sheet. Will Fed be buying shorter term securities or longer term securities?
  • The course of interest rates.

Right now market is assuming that the Fed will be extremely dovish.  If it turns out that the Fed statement is not extremely dovish, expect a big selloff in the stock market.  On the other hand if the Fed is extremely dovish,  expect the market to move toward the resistance shown on the chart. Click here to see the chart.

Short Squeeze

Professionals expected the market to go down yesterday to reverse gains from the week of quadruple witching. (Please see Friday’s Morning Capsule.)  However it appears that mom and pop, oblivious to the mechanics of the market, were sending money over the weekend to mutual funds and money managers.  This money had to be invested yesterday afternoon. This caused the market to rise.

Those who aggressively short sold yesterday are buying to cover this morning.  This is putting upward pressure on the market.

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 selling.

Oil

OPEC and Russia are extended production cuts to June.  This is causing oil to knock at the door of $60. The momo crowd is aggressively buying oil.  Smart money is inactive.

Marijuana

TLRY earnings were worse than the whisper numbers and consensus numbers.  However the momo crowd is ignoring the bad news and latching on to the bullish stance taken by TLRY management.

The momo crowd is buying marijuana stocks in the early trade. 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 neutral but expect the market to open higher.

Interest rates are ticking up and bonds are ticking down.

Currencies are range bound.

Gold futures are at $1308, silver futures are at $15.41, and oil futures are $59.63.

S&P 500 resistance levels are 2860, 2918 and 2925; support levels are 2840, 2800 and 2765.

DJIA futures are up 118  points.

STOCK MARKET AT AN INFLECTION POINT — THIS IS WHAT TO EXPECT IF YOU BELIEVE TA

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

Inflection Point

The stock market is at an inflection point. The key question for investors is, “What is next?”

Let us explore with the help of a chart if you believe in traditional technical analysis. Traditional technical analysis no longer works as well as it used to, please click here to see the reasons.

Please click here for an annotated chart of S&P 500 ETF (SPY). Somewhat different conclusions are to be drawn from charts of Dow Jones Industrial Average (DJIA), Nasdaq100 ETF (QQQ) and small-cap ETF (IWM). Please note the following:

  • The chart shows two key levels.
  • By some measures, there is a breakout above the lower key level.
  • In our analysis at The Arora Report, the breakout is suspect at this time because it is not decisive and it happened on quadruple witching.
  • The chart shows (depending upon how you count) five previous attempts to break through this level have failed.
  • The chart shows Arora buy signal on Christmas Eve right at the low of the market.
  • The chart shows that The Arora Report correctly identified prior lows as ‘not likely lows’.
  • RSI shows that the overbought condition has been relieved. This augers well for a breakout.
  • If the breakout becomes decisive, expect the market to move to the higher key level marked ‘resistance’.
  • If the breakout fails, expect the market to move to the support zone shown on the chart.

Momo Crowd And Smart Money In Stocks

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

Gold

The momo crowd continues to buy gold. The momo crowd buying is keeping gold above $1,300.  Smart money is inactive.

Oil

The momo crowd is buying oil.  Resistance at $60 in WTI is acting like a magnet for traders. Smart money is inactive.

Marijuana

Bulls are excited about Tilray (TLRY) earnings that will be released today.  The momo crowd is aggressively buying marijuana stocks in the early trade.  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 negative but can quickly turn positive.

Interest rates are ticking up and bonds are ticking down.

Currencies are range bound.

Gold futures are at $1305, silver futures are at $15.40, and oil futures are $67.94.

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

DJIA futures are down  47 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% – 31% and short to medium-term hedges of  5% – 15% and short term hedges of 5%.

 

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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