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.
BLOWOUT GDP NUMBER, MIXED EARNINGS, OIL FALLS
To gain an edge, this is what you need to know today.
Blowout GDP Number
Q1 GDP number came at 3.2% vs. 2.5% consensus. This is a blowout number indicating that the economy did much better in the last quarter than expectations.
GDP is a lagging indicator. Lagging indicators tell us what happened. Our models focus on leading indicators. Leading indicators give us an indication of what may happen in the future.
Mixed Earnings
Earnings released since yesterday’s Morning Capsule are mixed.
Japan
Japan March Industrial Production came at -0.9% vs. +0.1% consensus.
South Korea
South Korea experienced the biggest fall in GDP in 10 years.
Momo Crowd And Smart Money In Stocks
The momo crowd is aggressively buying stocks. Smart money is inactive.
Gold
The momo crowd is lightly buying gold. Smart money is inactive.
Oil
Crude oil is falling on rising inventories. Most of the selling is technical as crude breaks below support at $65.
The momo crowd is aggressively selling. Smart money is lightly buying.
Marijuana
NBEV is expanding beyond beverages to a full line of CBD products.
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.
Interest rates are ticking up and bonds are ticking down.
Currencies are range bound.
Gold futures are at $1279, silver futures are at $15.03, and oil futures are $63.89.
S&P 500 resistance levels are 2950 and 3000; support levels are 2925, 2918 and 2860.
DJIA futures are up 14 points.
MIXED EARNINGS, MOMENTUM LOSS, DOLLAR AND OIL RISE, CHINA DROPS
To gain an edge, this is what you need to know today.
Mixed Earnings
There are more good earnings; of note are MSFT and FB beating the consensus and whisper numbers. This is positive for the stock market.
MMM, a barometer of the global economy reported earnings below consensus and below whisper numbers. This is likely to raise concerns about global economic growth.
Loss Of Momentum
The stock market is losing momentum in the very, very short term. The market needs to start gaining momentum soon, otherwise it will raise the specter of a failure here.
China Drops
China drops on rumors that PBOC may reduce liquidity, Chinese stocks dropped 2.4%.
Japan
Japanese stocks gained 0.5% ignoring China on extra dovish Bank of Japan.
Momo Crowd And Smart Money In Stocks
The momo crowd is buying stocks in the early trade. Smart money is lightly selling in the early trade.
Gold
There is no discernable momo crowd or smart money activity in gold.
Oil
Oil is rising on sabotage of a Nigerian pipeline.
The momo crowd is buying oil. Smart money is inactive.
Marijuana
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 negative but can quickly turn positive.
Interest rates and bonds are range bound.
Dollar hit a four month high.
Gold futures are at $1279, silver futures are at $14.85, and oil futures are $66.15.
S&P 500 resistance levels are 2950 and 3000; support levels are 2925, 2918 and 2860.
DJIA futures are down 112 points.
CHART SAYS STAY BULLISH ON THE STOCK MARKET BUT THESE ARE REASONS TO BE CAREFUL
To gain an edge, this is what you need to know today.
The Chart
With the stock market at highs, it makes sense to pay attention to what the chart says; let’s examine.
Please click here for the chart of S&P 500 ETF (SPY) that represents S&P 500 index (SPX). Similar qualitative conclusions can be drawn from the charts of Dow Jones Industrial Average (DJIA), Nasdaq 100 (QQQ) and small-cap ETF (IWM). Please note the following:
- The chart shows the volume is low. This is a negative. A breakout on higher volume indicates conviction.
- RSI is overbought. When markets are overbought, they are vulnerable and tend to pullback.
- The chart shows the pattern that RSI has traced is positive. This indicates a pullback should be bought unless something else changes.
- The chart shows that the latest rise was triggered by earnings better than the consensus and whisper numbers. Of note is that immediately before the latest rise in the stock market were earnings from Dow Jones Industrial Average components Coca Cola (KO), United Technologies (UTX), Verizon (VZ) and Procter & Gamble (PG).
- Semiconductors have been the leaders in this market rise. Texas Instruments (TXN), a major semiconductor company indicated in its conference call that demand continues to slow across most markets. The data we gather at The Arora Report has been showing the same thing. However, semiconductor stocks have been running up on hopes that the cycle has bottomed even though there is no good confirmation data.
- Investors ought to watch semiconductor stocks such as Intel (INTC), AMD (AMD), Micron (MU) and Applied Materials (AMAT) as indicators of where the market may go.
- Popular large cap stocks such as Amazon (AMZN), Apple (AAPL), Facebook (FB) and Microsoft (MSFT) continue to show patterns that indicate further up moves.
- At The Arora Report we monitor leading economic indicators from 23 countries. These indicators have improved but have not ruled out slowing global economic growth. This is still a risk factor.
- So far earnings are coming better than expected but a large number of important earnings are still ahead. This is a major risk factor.
- The chart shows that The Arora Report gave a buy signal on Christmas Eve which has turned out to be the low of the current cycle.
- The fuel for the market rise since The Arora Report buy signal has been the easing monetary policy from the central banks.
- Now there are indications that China may stop further easing. All markets are connected and if Chinese stop easing, this may put a brake on the rise.
Please pay attention to ‘What To Do Now’ section below; recommendations in this section change with time and market conditions as determined by the ZYX Asset Allocation Model.
Momo Crowd And Smart Money In Stocks
The momo crowd is buying stocks in the early trade. Smart money is inactive.
Gold
There is no discernable momo crowd or smart money activity.
Oil
API data shows that crude inventories rose by 6.9 million barrels vs. consensus of a draw of 0.5 million barrels. Oil should have fallen on this data but has continued to stay at a high level due to geopolitical issues.
The momo crowd is lightly buying oil. Smart money is inactive.
Marijuana
There is optimism over mergers and acquisitions in the marijuana space.
The momo crowd is buying marijuana stock. Smart money is inactive.
Technical Patterns
Marijuana stocks are tracing a hanging man. This is bearish. ETF of interest is MJ.
Turkish stocks are tracing a hammer. This is bullish. ETF of interest is TUR.
Chinese technology stocks are tracing a flag. This is bullish. ETF of interest is CQQQ.
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.
Interest rates are ticking up and bonds are ticking down.
Dollar is slightly stronger.
Gold futures are at $1272, silver futures are at $14.79, and oil futures are $66.21.
S&P 500 resistance levels are 2950 and 3000; support levels are 2925, 2918 and 2860.
DJIA futures are up 5 points.
BETTER THAN EXPECTED EARNINGS CREATE OPTIMISM BUT LESS STIMULUS FROM CHINA MAY PUT A BRAKE, NO OIL SPR RELEASE
To gain an edge, this is what you need to know today.
Better Than Expected Earnings
So far earnings are coming better than expected. Earnings from Dow components KO, UTX, VZ and PG came better than the consensus.
Less Stimulus From China
There is a report that Chinese government is not comfortable with increasing monetary stimulus. The stock market has risen because of easy money from central banks. China stopping more easing may put a brake on the stock market.
Momo Crowd And Smart Money In Stocks
The momo crowd is lightly buying. Smart money is inactive.
Gold
There is no discernable momo crowd or smart money activity in gold.
Oil
The government is not planning on releasing oil from the Strategic Oil Reserve to reduce oil prices. This is creating bullish sentiment.
Both momo crowd and smart money are inactive.
Marijuana
The momo crowd is buying marijuana stocks. The 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 $1274, silver futures are at $14.31, and oil futures are $65.71.
S&P 500 resistance levels are 2918, 2925 and 2950; support levels are 2860, 2840 and 2800.
DJIA futures are up 49 points.
STOCK MARKET SENTIMENT DAMPENS ON TRUMP ACTION THAT CAUSES OIL TO RISE
To gain an edge, this is what you need to know today.
Trump To Stop Oil Waivers For Iran
Trump plans to stop oil waivers for Iran when they expire on May 2nd. When Trump imposed sanctions against Iran, the U. S. granted waivers to certain countries such as India and China to import some Iranian oil.
The consensus was that the waivers would be renewed and oil price would fall. The Arora Report was in the minority and not agreeing with the consensus. In our analysis there is a high probability that the waivers would not be renewed. For this reason, we have maintained a long position on oil ETF USO in ZYX Buy and are holding several oil stocks as well as oil service ETF OIH in ZYX Global.
Impact Of Oil
Higher oil prices help oil stocks go higher. This helps the stock market. But oil stocks are only a very small part of the market. If oil starts rising too high, it hurts certain industries and U. S. consumers due to higher gasoline prices. In the U. S., the consumer makes up about 70% of the economy.
India And China
India and China are rising powers. Both are big oil importers. When oil prices rise, it hurts their economies. These days stock markets across the globe are influenced by each other.
Momo Crowd And Smart Money In Stocks
The momo crowd is lightly selling stocks in the early trade. The smart money is inactive.
Gold
There is no discernable momo crowd or smart money activity in gold.
Oil
Oil is breaking above $65. The momo crowd is aggressively buying oil. The smart money is also buying oil.
Marijuana
Canopy Growth gets more Wall Street love.
The momo crowd is buying marijuana stocks. The 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.
Interest rates are ticking down and bonds are ticking up.
Currencies are range bound.
Gold futures are at $1279, silver futures are at $14.96, and oil futures are $65.56.
S&P 500 resistance levels are 2918, 2925 and 2950; support levels are 2860, 2840 and 2800.
DJIA futures are down 86 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%.
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