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.
PAY ATTENTION TO LOWER RETAIL SALES
To gain an edge, this is what you need to know today.
Lower Retail Sales
The U. S. economy is about 70% dependent on consumers. For this reason retail sales are very important. Retail Sales ex-auto came at 0.3% vs. 0.5% consensus. We exclude automotive because the data is very noisy and makes it difficult to come up with good forecasts. Please click here to see how we filter the noise in data.
Momo Crowd And Smart Money In Stocks
The momo crowd is aggressively buying stocks. The smart money is inactive.
Gold
Gold is seeing selling as the dollar strengthens.
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 neutral but expect the market to open higher.
Interest rates are ticking up and bonds are ticking down.
Gold futures are at $1207, silver futures are at $14.22, and oil futures are $68.84.
S&P 500 resistance levels are 2918, 2925 and 2950; support levels are 2860, 2840 and 2800.
DJIA futures are up 24 points.
HEAVY BUYING ON OPTIMISM OVER TRADE TALKS
To gain an edge, this is what you need to know today.
Trade Talks
China has welcomed a U. S. invite for trade talks later this month. This is resulting in significant optimism in stock markets across the world.
Dollar
The dollar is weakening on the prospect of trade talks. This is positive for U. S. stocks.
Momo Crowd And Smart Money In Stocks
The momo crowd is aggressively buying stocks in the early trade. The smart money is also lightly buying stocks.
Consumer Price Index
Core CPI came at 0.1% vs. 0.2% consensus. This indicates that inflation at the consumer level is still contained.
Jobless Claims
Initial Jobless Claims carry a heavy weight in our timing models. Initial Claims came at 204K vs. 210K consensus. This is positive.
Gold
Gold is seeing aggressive buying as the dollar weakens. Gold is priced in dollars. For this reason a weaker dollar is good for gold.
Oil
Oil is giving up some of its gains from yesterday. Part of the buying in oil was related to hurricane Florence. Hurricane Florence has been downgraded.
Technical Patterns
Some stocks in India are tracing an Island Bottom. This is bullish. ETF of interest is EPI
Some stocks in Australia are tracing an Island Bottom. This is bullish. ETF of interest is EWA.
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 ticking and bonds are ticking up.
Gold futures are at $1214, silver futures are at $14.33, and oil futures are $69.64.
S&P 500 resistance levels are 2918, 2925 and 2950; support levels are 2860, 2840 and 2800.
DJIA futures are up 111 points.
MUTED INFLATION DATA, DRAM SUPPLY
To gain an edge, this is what you need to know today.
Muted Inflation To Encourage Fed
Core PPI (Producer Price Index) came at -0.1% vs. +0.2% consensus. In prior readings, PPI was rising. The theory is that sooner or later producers pass on price hikes to consumers. This data shows that prices at the producer level are now falling.
The muted inflation should encourage the Fed to not aggressively raise interest rates. This should be good for the economy and the stock market.
DRAM Supply
Most investors do not realize that not only semiconductor memory chips play a big part in our daily lives, they have a disproportionate effect on a large number of companies and sentiment in the stock market.
Broadly speaking, there are two kinds of semiconductor memory chips — NAND and DRAM. In ZYX Buy, before the Wall Street, we concluded that there was an oversupply of NAND and prices were likely to fall. We have also been writing about the risk to semiconductors because of the potential of excess supply in DRAM.
In ZYX Global, on March 13, 2018, we gave a signal to take profits on one-third of our semiconductor position through ETF SMH. This was a major signal in that there have been very large gains in this long term position in the portfolios.
We were the first ones to express these concerns. Slowly this concern has been creeping into some Wall Street analysis but there also have been ultra bullish Wall Street analysts providing solid data that the concerns may be overblown. Today is the tipping point in that Wall Street is now coming to the conclusion that the issue is real.
Beige Book
The Fed’s Beige Book will be released at 2:00 pm ET today and may be a market moving event.
Momo Crowd And Smart Money In Stocks
The momo crowd is buying in early trade. Smart money is lightly selling.
Gold
Gold is getting whipsawed around the $1200 level.
Oil
Oil has broken above $70. Yesterday at 4:30 pm, API reported a draw significantly bigger than the consensus. EIA data will be released at 10:30 am ET today.
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 and can easily swing either way.
The dollar is slightly weaker.
Interest rates are ticking down and bonds are ticking up.
Gold futures are at $1199, silver futures are at $14.12, and oil futures are $70.04.
S&P 500 resistance levels are 2918, 2925 and 2950; support levels are 2860, 2840 and 2800.
DJIA futures are down 12 points.
BIGGEST WAR GAMES SINCE THE SOVIET FALL, PAY HEED TO DRAMATIC SHIFT IN MONEY FLOWS
To gain an edge, this is what you need to know today.
Biggest War Games Since The Soviet Fall
You never know where the risk comes from. Therefore it is important to keep an eye on anything out of the ordinary. Russia just began the biggest war games since the fall of the Soviet Union. The war games include 300,000 troops. To make matters worse for the U. S., the war games are in cooperation with China and include joint exercises with the Chinese army.
We keep a close eye on geopolitical developments that can affect investments of our subscribers.
Momo Crowd And Smart Money In Stocks
Momo crowd is aggressively selling in the early trade. The smart money is inactive.
Pay Heed To Dramatic Shift In Money Flows
Tech stocks have been the generals of this bull market. A dramatic change in money flows is beginning to happen in popular tech stocks. If this continues, the stock market will be at higher risk. Think of this as an early warning that all prudent investors should heed. Let’s explore with the help of a chart.
Please click here for the chart showing segmented money flows, risk adjusted rank and non-risk adjusted rank of 11 popular tech stocks. Please note the following from the chart:
- The most dramatic change has been in money flows in Apple (AAPL) stock. Momo crowd money flows have gone from extremely positive to very negative. Smart money flows have gone from mild positive to negative.If these trends continue, both risk adjusted and non-risk adjusted rank of Apple shown on the chart will slip. The rank is determined based on the six screens of the ZYX Change Method. Please click here to see details of the six screens .What is happening to Apple? The answer lies in the signal The Arora Report provided to its subscribers last week before the news became widely known. The signal was given at a time before the shift in money flows in Apple. For your convenience, here is that signal: “Several AAPL products including Apple Watch, Mac mini and HomePod are affected by the proposed 25% tariff on imports from China. AAPL derives about 70% of its profits from iPhone. At this time it appears that iPhone is not on the list. The ‘Buy Now’ rating on AAPL for those following the ‘Good Way’ is a ‘NO.’ The buy zone is being temporarily suspended. For tracking purposes the plan is to continue to hold the long term position. Those in AAPL stock may want to review the quantity held.”
- There is also a dramatic change in money flows in Amazon (AMZN). Momo crowd has been driving Amazon stock higher. Now momo crowd money flows in Amazon have shifted from extremely positive to neutral.
- As shown on the chart, the momo crowd money flows have turned extremely negative in Facebook (FB) stock and Alibaba (BABA) stock. But smart money flows in these stocks are mild positive.
- AMD (AMD) stock still holds the number one position in non-risk adjusted rank.
- Google (GOOG) (GOOGL) stock still holds the number one position in risk adjusted rank.
- Smart money flows are mild negative in Netflix (NFLX) stock and NVIDIA (NVDA) stock.
- Smart money flows are neutral in Tesla (TSLA) stock and Microsoft (MSFT) stock.
- Momo crowd money flows are negative in Intel (INTC) stock but smart money flows are mild positive.
Interestingly momo crowd money flows in broad based ETFs such as S&P 500 (SPY), Nasdaq 100 (QQQ) and small cap ETF (IWM) are still mild positive. Dow Jones Industrial Average (DJIA) which is represented by ETF (DIA) has negative momo crowd money flows.
In the long term, fundamentals drive the stocks. If you could consider only one fundamental factor, it is earnings growth. The problem with traditional fundamental analysis is that everybody has more or less the same information. For this reason, traditional fundamental ratios such as price earning do not provide an edge. For those investors who are looking for an edge, the data shown on the chart provides that edge.
Gold
Gold is coming under pressure as the dollar strengthens.
Oil
Trading in oil is listless awaiting API inventory data.
Technical Patterns
Industrial stocks are tracing a Shooting Star pattern. This is bearish. 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 negative but can easily reverse.
Interest rates are ticking up and bonds are ticking down.
Gold futures are at $1194, silver futures are at $14.07, and oil futures are $67.59.
S&P 500 resistance levels are 2918, 2925 and 2950; support levels are 2860, 2840 and 2800.
DJIA futures are down 122 points.
CHINA TRADE SURPLUS HITS RECORD HIGH, TRUMP THREAT, MOMO IGNORES THE NEWS AND BUYS
To gain an edge, this is what you need to know today.
China Trade Surplus Hits Record High
China trade surplus in the U. S. hit a record high of $31.05 billion last month. As a reference the surplus was $28.09 billion in July.
Trump Threat
Trump has issued as threat that he can impose additional tariffs on China. Trump is also imploring Apple (AAPL) to shift manufacturing to the U. S. At present most of Apple manufacturing is done in China.
Asia Malaise
In Asian markets there is a malaise because of Trump’s statement regarding Apple, wider trade surplus and Trump’s threat of additional tariffs.
Momo Crowd And Smart Money In Stocks
In the early trade the momo crowd is ignoring everything and buying aggressively. Smart money is lightly selling into the strength.
Gold
Gold was sold earlier and stops were taken out. Now that stops have been taken out gold is rebounding.
Oil
The momo crowd is aggressively buying oil this morning.
Technical Patterns
Several technology stocks are tracing an Inverted Hammer. This is bullish. ETF of interest is QQQ.
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 quickly turn negative.
Interest rates, bonds and currencies are range bound.
Gold futures are at $1200, silver futures are at $14.23, and oil futures are $68.04.
S&P 500 resistance levels are 2918, 2925 and 2950; support levels are 2860, 2840 and 2800.
DJIA futures are up 89 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 21% – 31% and short to medium-term hedges of 10% – 15% and very short term hedges of 10% – 15%.
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