WEEKLY MARKET DIGEST: BIG RALLY IN SILVER, TRUMP SUCCEEDS AT RALLYING STOCKS, STRONG PERSONAL INCOME $DIA $GLD $QQQ $SLV $SPY $TBT

WEEKLY MARKET DIGEST: BIG RALLY IN SILVER, TRUMP SUCCEEDS AT RALLYING STOCKS, STRONG PERSONAL INCOME $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 PERSONAL SPENDING BUT INCOME LACKS, LIGHT PRE-HOLIDAY TRADING

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

Strong Personal Spending But Income Lacks

Personal spending came at 0.6% vs. 0.5% consensus.  This indicates that the American consumer continues to spend.  Investors ought to pay attention to spending because the US economy is about 70% consumer based.

Light Pre-Holiday Trading

Markets are illiquid because of the holiday.  It is easy to push the market up under these light trading conditions.  The real test will be next week when big players return from vacation.

Momo Crowd And Smart Money In Stocks

Momo crowd is aggressively buying stocks.  Smart money is inactive.

Gold

Momo crowd is acting like a yo-yo in gold.  Smart money is inactive.

Silver gave up some of its gains yesterday afternoon.  This morning, momo crowd is aggressively buying silver.  Smart money is inactive in silver.

Oil

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

Marijuana

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

Technical Patterns

Several bank stocks are tracing a wedge.  This is bullish.  ETF of interest is KBE.

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 slightly stronger.

Gold futures are at $1538, silver futures are at $18.53, and oil futures are $56.34.

S&P 500 resistance levels are  2950, 3020 and 3050; support levels are 2925, 2918 and 2860.

DJIA futures are up 148 points.

BUYING ON CHINA NOT RETALIATING, POSITIVE SEASONALITY, ECONOMIC DATA IN LINE

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

China Will Not Retaliate

China is deciding to not immediately retaliate against higher tariffs that Trump recently imposed.  This is creating buying.

Positive Technicals

Please click here for a chart that was published in the morning capsule on Monday.  At The Arora Report, we use several proprietary indicators that give you an edge. One of them is VUD indicator.  We wrote:

The VUD indicator shows that during all of the selling, the indicator was mostly positive. In plain English, this means that sellers were very aggressive while buyers were being extremely careful; nonetheless there was net buying throughout most of the tumultuous period. This is a short term positive for the market.

From the low shown on the chart, S&P 500 has risen about 108 points.  Technicals remain positive for the very, very short term, but the market is about to run into resistance.  We will be very carefully watching to see how the market behaves at the resistance.

Positive Seasonality

Historically, the stock market is positive going into Labor Day.

GDP

Q2 GDP – Second Estimate came at 2.0% vs. 2.0% consensus.

Jobless Claims

Initial jobless claims came at 215K vs. 215K consensus.

Momo Crowd And Smart Money In Stocks

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

Gold

Momo crowd is acting like a yo-yo in the early trade.  Smart money is inactive.

Yesterday, momo crowd was aggressively buying silver.  In the early trade today, momo crowd is lightly selling silver.

Oil

EIA  data was positive for oil.  Momo crowd is buying oil.  Smart money is inactive.

Marijuana

Momo crowd is buying marijuana in the early trade.  Smart money is inactive in the early trade but lightly bought near the lows yesterday.

Technical Patterns

Oil is tracing a bottoming triangle.  This is bullish.  ETF of choice is USO.

Russian stocks are tracing a head and shoulders bottom.  This is bullish.  ETF of interest is RSX.

Note that USO and RSX tend to move together.

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.

Dollar is stronger.

Gold futures are at $1554, silver futures are at $18.74, and oil futures are $55.99.

S&P 500 resistance levels are  2925, 2950 and 3000; support levels are 2800, 2765 and 2740.

DJIA futures are up 244 points.

A HARSH STEP IN U. K. TO PUSH THROUGH BREXIT, LONG BOND YIELD FALLS TO RECORD LOW, BIG OIL DRAW

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

A Harsh Step In U. K.

Prime Minister Boris Johnson is moving to suspend Parliament  for about five weeks to prevent law makers from blocking a no-deal Brexit.  The British pound is falling.  Investors should not ignore the risks of a no-deal Brexit.

Long Bond Falls To Record Low Yield

The 30-year Treasury bond yield has fallen to record low.  Yield curve inversion continues to worsen.  The consensus view on Wall Street is that this will lead to a recession.  Please click here for the chart we previously shared with you regarding the yield curve and recessions.  As we have previously shared with you, our analysis this time may be different because of unusual central bank policies; it is not a forgone conclusion that the yield curve is going to lead to a recession.

Momo Crowd And Smart Money In Stocks

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

Gold

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

Oil

API reported that oil inventory showed a draw of 11.1 million barrels vs. 2.11 million barrel draw consensus.  The data is causing a surge in oil.

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

Marijuana

The momo crowd is aggressively selling 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 negative but can easily turn positive on news.  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 $1550, silver futures are at $18.48, and oil futures are $55.86.

S&P 500 resistance levels are  2918, 2925 and 2950; support levels are 2840, 2800 and 2765.

DJIA futures are down 36 points.

MOMO CROWD BUYING STOCKS IN THE ABSENSE OF ANY MATERIAL ECONOMIC DATA, IRAN NOT RECEPTIVE TO TRUMP

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

Optimism Over Trade Talks

There is optimism in the market over trade talks.  However there is no concrete news.

Momo Crowd And Smart Money In Stocks

The momo crowd is buying stocks in the early trade in the absence of any significant economic data or news.  Smart money is inactive.

Gold

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

Oil

Oil was under pressure after the French president proposed talks between the U. S. president and Iran’s president.  Trump seems to be open but Iran is not receptive.  Now oil is rebounding.

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

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 but can easily turn 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.

Currencies are range bound.

Gold futures are at $1540, silver futures are at $18.00, and oil futures are $54.18.

S&P 500 resistance levels are  2918, 2925 and 2950; support levels are 2860, 2840 and 2800.

DJIA futures are up 107 points.

THE CHART TELLS THE REAL STORY OF TRUMP CHINA GAMBIT THAT MOST INVESTORS MISSED, DURABLE GOODS

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

The Real Story

Most investors have missed the real story about the stock market and the latest Trump gambit on China trade war. Let’s explore it with the help of a chart.

The Chart

Please click here for an annotated chart of S&P 500 futures (Parris symbol for September contract that works in MarketWatch). Since most investors do not watch futures, normally I use a chart of S&P 500 ETF (SPY), Nasdaq 100 ETF (QQQ) or Dow Jones Industrial Average (DJIA) as appropriate. However since the stock market does not trade on Sunday and at night, to understand the story, a chart of S&P 500 futures is the only option.

Note the following:

  • The chart shows that the stock market futures were humming along when the unexpected news of China imposing new tariffs on U. S. goods came.
  • The chart shows that the stock market fell on the news of new tariffs from China. The new tariffs were a clear escalation of a trade war.
  • The chart shows that the stock market started moving up after the much anticipated Federal Reserve Chairman Powell speech at Jackson Hole.
  • It is true that Powell did not come out and say in a straight forward language that he was ready to comply with most of President Trump’s commands. However if you read the speech text carefully, there is an unmistakable conclusion that Powell has mostly given in to Trump.
  • Trump, perhaps based on the headlines about Powell’s speech, criticized Powell. Many headlines about Powell’s speech in the media lacked careful scrutiny of the speech.
  • The smart money in the stock market clearly understood that Powell was very dovish and started buying as is clear from the chart.
  • The chart shows Trump’s angry response to China.
  • The chart shows that after Trump’s angry response the stock market fell out of bed with a major decline.
  • The chart shows that the next time stock futures opened, they gapped down. Since many investors follow Dow Jones Industrial Average, as a reference, at one point stock market futures were down equivalent of about 300 Dow Jones Industrial Average points after having previously fallen over 600 points.
  • Stock market futures jumped when China’s Vice Premier Liu He called for calm attitude and consultation and President Trump stated that China wanted to be back to the table again.
  • The real story shown on the chart comes from the VUD indicator. The VUD indicator is the most sensitive measure of net demand/supply in real time. Positive is shown on the chart with green color and negative is shown on the chart with orange color.
  • The VUD indicator shows that during all of the selling, the indicator was mostly positive. In plain English, this means that sellers were very aggressive while buyers were being extremely careful; nonetheless there was net buying throughout most of the tumultuous period. This is a short term positive for the market.

Trump Gambit

It is clear the at least in the very short term, Trump’s gambit of an extremely aggressive and quick response of raising tariffs on Chinese goods has worked. This is indeed good news for investors in the short term based on the information available as of this writing. Investors ought to be aware that the situation can change rapidly. Therefore it is important for investors to stay tuned to credible analysts with proven track records. Those looking for trading opportunities may want to stay tuned in real time.

Apple (AAPL) is in the cross hair of the trade war. Apple stock which had previously fallen was recovering as of this writing on Trump comments. Popular semiconductor stocks such as Intel (INTC), AMD (AMD), NVIDIA (NVDA) and Micron (MU) had fallen on trade war escalation; these semiconductor stocks were also recovering as of this writing. Popular stocks such as Facebook (FB), Amazon (AMZN) and Google (GOOG) (GOOGL) that are not directly impacted by trade was were also showing signs of recovery as of this writing on Trump comments that China wants to head back to the table.

Gold and silver futures had also run up when stock futures fell. As of this writing, gold ETF (GLD) and silver ETF (SLV) are pulling back compared to the highs seen in futures.

What Does It All Mean?

These developments are positive in the very, very short term unless there is new negative news. The probability has gone up of a better outcome for the United States in the trade war. Having said that, investors ought to focus on the word ‘probability’. Probability is very different from certainty. Consider starting with Arora’s Second Law of Investing and Trading: Nobody knows with certainty, what is going to happen next in the markets. Consider running away from anyone who claims to know with certainty how the trade war is going to end and how the stock market is going to behave.

Durable Goods

Durable Goods Ex-Transports came at -0.4% vs. +0.1% consensus.  This indicates weakness.  Ignore the headline that does not exclude transports and reads positive.

Momo Crowd And Smart Money In Stocks

The momo crowd is aggressively buying stocks in the early trade.  Smart money is inactive.  Note that the momo crowd was aggressively selling stocks on Friday afternoon.

Gold

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

Oil

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

Marijuana

The momo crowd is buying marijuana stocks.  Smart money is also lightly and selectively buying marijuana stocks.

Technical Patterns

Several technical patterns are developing but we are not publishing them due to high risk of anyone taking a trade based on these technical patterns at this time.

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 slightly stronger.

Gold futures are at $137, silver futures are at $17.57, and oil futures are $54.71.

S&P 500 resistance levels are  2918, 2925 and 2950; support levels are 2860, 2840 and 2800.

DJIA futures are up 252 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  5% – 15% and short term hedges of 5% – 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.

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