(The Weekly Digest reproduces the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers. )
BLOW OUT GDP, BULLISH ‘W’ PATTERN FORMING BUT HEAVY RESISTANCE AHEAD
This is what you need to know today.
We have been sharing with you that the hard data shows the U. S. economy is performing well and now there is another positive data point.
GDP came at 1.0% vs. 0.4% consensus.
On February 18, 2016, we brought to subscribers’ attention a developing bullish pattern of S&P 500 Index represented by ETF SPY staging gains of 1% plus three days in a row. The previous time it happened was in 2011, and a rally ensued. Please see The S&P 500 rose for three days in a row — here’s what it could mean . On February 19, 2016, when the market was pulling back as well as gloom and doom had taken hold, we wrote,
Stocks are pulling back. After the strong four day rally, this pull back is natural and does not foreshadow anything about the future.
The chart, a bullish ‘W’ pattern is forming now.
Please click here for an annotated chart of ESH6.
The chart also shows the heavy resistance zone. The market is now right up against this resistance zone.
When a ‘W’ pattern is formed near the bottom yearly range, there is about 66% probability of the market going up. However if the market can now overcome the heavy resistance zone shown on the chart, there is 84% probability of the market going up.
If only the markets were so simple. Technicals patterns work until they don’t work. For this reason, technical patterns constitute only a small part of The Arora Report’s adaptive timing model. An adaptive model automatically changes with market conditions. Adaptiveness overcomes the major weakness of conventional models that work only for a brief period and then stop working as the market conditions change.
There are several flies in the ointment even with this technical pattern. Pattern of popular ETF QQQ does not have as bullish of a look. Same is true of the popular small cap ETF IWM. Intuitively the foregoing makes a lot of sense. At times of high volatility, money managers tend to focus on large less volatile stocks and for this reason are more likely to buy stocks in the S&P 500.
For intermarket confirmation, look for gold GLD and silver SLV to go down, utilities XLU to go down, and Japanese yen FXY to weaken.
Oil continues to rise on speculation of oil producing countries coming to some kind of deal.
Smart Money is selling gold, silver, bonds and yen in response to strong GDP data.
Our very, very short-term early stock market indicator is positive.
Gold futures are at $1230, silver futures are at $15.11, and oil futures are $34.25.
S&P 500 resistance levels are 2000, 2017, and 2038; support levels are 1920, 1909, and 1900.
DJIA futures are up 126 points.
What To Do Now?
It is important for investors to look ahead and not in the rear view mirror.
Consider continuing to hold existing positions. Based on individual risk preference, consider holding cash 28 – 44%, and short to medium-term hedges of 30%.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.
A Reminder
As our long time subscribers know well, that during the 2008 and early 2009 market crash, when stock market lost about 50%, subscribers to The Arora Report made money by the boat load. For long only investors, this remarkable performance was achieved by using inverse ETFs.
Our models do not expect a repeat of 2008. In the most likely worst case, there may be a garden variety bear market that typically occurred every 18 to 24 months prior to the recent six-year market run.
Individual Trades
Please click on Home on the left side of the Menu. Scroll down on the Home Page for individual trades.
Click on the Search by Symbol/Tag on the right hand side and click on the symbols of interest.
CHINA FALLS BUT U. S. TO DECOUPLE, DURABLES BOUNCE BACK, QUANTS STEP HEAVILY INTO GOLD
This is what you need to know today.
Overnight China fell 6.4%. For a change, at least at the open, U. S. stock market is likely to decouple from China.
Durable Goods bounce back from pull back in December. January Durable Goods ex-transports came at +1.8% vs. +0.4% consensus; December revised to -0.7% from previously reported -1.0%.
Initial Jobless Claims came at 272K vs. 270K consensus.
The foregoing data does not support the case for a recession.
Quants have heavily stepped into gold. The biggest part of their algorithms are driven by movements in U. S. stocks, Chinese stocks, and oil.
Oil is continuing to hold its rally.
Dollar is strengthening.
Interest rates are range bound.
Our very, very short-term early stock market indicator is neutral but can turn quickly.
Gold futures are at $1237, silver futures are at $15.17, and oil futures are $31.71.
S&P 500 resistance levels are 1962, 2000, and 2017; support levels are 1920, 1909, and 1900.
DJIA futures are up 30 points.
What To Do Now?
It is important for investors to look ahead and not in the rear view mirror.
Consider continuing to hold existing positions. Based on individual risk preference, consider holding cash 28 – 44%, and short to medium-term hedges of 30%.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.
A Reminder
As our long time subscribers know well, that during the 2008 and early 2009 market crash, when stock market lost about 50%, subscribers to The Arora Report made money by the boat load. For long only investors, this remarkable performance was achieved by using inverse ETFs.
Our models do not expect a repeat of 2008. In the most likely worst case, there may be a garden variety bear market that typically occurred every 18 to 24 months prior to the recent six-year market run.
Individual Trades
Please click on Home on the left side of the Menu. Scroll down on the Home Page for individual trades.
Click on the Search by Symbol/Tag on the right hand side and click on the symbols of interest.
SPECULATION BUILDS ABOUT COORDINATED ACTION FROM G20, BREXIT FEARS
This is what you need to know today.
G20, a group of the world’s 20 largest economies, will meet in Shanghai February 26 – 27. Expectations are low. However in trading circles, speculation is beginning to build about a coordinated action. If a coordinated action occurs, stocks will fly.
In our analysis, the probability of a coordinated action is low.
Yesterday Saudi Oil Minister ruled out production cut, he wants to focus on production freeze. However, Iran issued a statement against production freeze.
At 4:30 pm yesterday, API inventories came at 7.1 million barrels vs. 3 million consensus. This crushed oil. DOE inventory data to be released at 10:30 am will be the market moving item.
Sterling fell below $1.39 on Brexit fears, a level not seen since 2009.
Commodities are falling and taking stocks down with them.
Gold and yen are rising as safe havens.
Our very, very short-term early stock market indicator is negative but can quickly turn.
Gold futures are at $1244, silver futures are at $15.38, and oil futures are $30.86.
S&P 500 resistance levels are 1909, 1920, and 1962; support levels are 1860, 1838, and 1800.
DJIA futures are down 145 points.
What To Do Now?
It is important for investors to look ahead and not in the rear view mirror.
Consider continuing to hold existing positions. Based on individual risk preference, consider holding cash 28 – 44%, and short to medium-term hedges of 30%.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.
A Reminder
As our long time subscribers know well, that during the 2008 and early 2009 market crash, when stock market lost about 50%, subscribers to The Arora Report made money by the boat load. For long only investors, this remarkable performance was achieved by using inverse ETFs.
Our models do not expect a repeat of 2008. In the most likely worst case, there may be a garden variety bear market that typically occurred every 18 to 24 months prior to the recent six-year market run.
Individual Trades
Please click on Home on the left side of the Menu. Scroll down on the Home Page for individual trades.
Click on the Search by Symbol/Tag on the right hand side and click on the symbols of interest.
COMMODITY PULL BACK LIKELY TO TAKE STOCKS WITH IT
This is what you need to know today.
Overnight most commodities have pulled back. Recently there has been high correlation between commodities and stocks. Commodity pull back is likely to cause a pull back in stocks.
Commodities and stocks are very overbought in the very short-term. The pull back is natural.
Turkey holds interest rates steady at 7.5%.
There is more acrimony between the U. S. and China as the U. S. accuses China of putting a radar system on a disputed island.
The upcoming referendum on Britain’s stay (Brexit) in EU is causing uncertainty.
Investors are again rushing into safe havens gold and yen. Interestingly investors are not buying bonds which have previously also acted as safe havens.
Some of the gains in oil yesterday were related to the expiring contract. As we expected, those gains are being given back.
Our very, very short-term early stock market indicator is negative but can turn quickly.
Gold futures are at $1219, silver futures are at $15.22, and oil futures are $33.18.
S&P 500 resistance levels are 1962, 2000, and 2017; support levels are 1920, 1909, and 1900.
DJIA futures are up 1 points.
What To Do Now?
It is important for investors to look ahead and not in the rear view mirror.
Consider continuing to hold existing positions. Based on individual risk preference, consider holding cash 28 – 44%, and short to medium-term hedges of 30%.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.
A Reminder
As our long time subscribers know well, that during the 2008 and early 2009 market crash, when stock market lost about 50%, subscribers to The Arora Report made money by the boat load. For long only investors, this remarkable performance was achieved by using inverse ETFs.
Our models do not expect a repeat of 2008. In the most likely worst case, there may be a garden variety bear market that typically occurred every 18 to 24 months prior to the recent six-year market run.
Individual Trades
Please click on Home on the left side of the Menu. Scroll down on the Home Page for individual trades.
Click on the Search by Symbol/Tag on the right hand side and click on the symbols of interest.
IRON ORE FLIES AND CRUSHES GOLD BUT TAKES STOCKS AND OIL FOR A RIDE
This is what you need to know today.
There is a remarkable development happening right now. Iron ore has broken up through heavy resistance at $50. The consensus has been that iron ore will fall to under $40. As of this writing, iron ore is now up about 30% from December low.
It is worth remembering that back in 2011 iron ore was trading over $180.
Iron ore is a miniscule part of the U. S. economy. Why would it move U. S. stocks so strongly? The answer is that iron ore contributed to the negative sentiment and now it is contributing to the positive sentiment.
As iron ore flies, gold prices are being crushed; again on sentiment.
Oil and dollar are moving higher on positive sentiment created by iron ore.
Interest rates are oblivious to iron ore.
Our very, very short-term early stock market indicator is positive.
Gold futures are at $1207, silver futures are at $15.07, and oil futures are $33.36.
S&P 500 resistance levels are 1962, 2000, and 2017; support levels are 1920, 1909, and 1900.
DJIA futures are up 159 points.
What To Do Now?
It is important for investors to look ahead and not in the rear view mirror.
Consider continuing to hold existing positions. Based on individual risk preference, consider holding cash 28 – 44%, and short to medium-term hedges of 30%.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.
A Reminder
As our long time subscribers know well, that during the 2008 and early 2009 market crash, when stock market lost about 50%, subscribers to The Arora Report made money by the boat load. For long only investors, this remarkable performance was achieved by using inverse ETFs.
Our models do not expect a repeat of 2008. In the most likely worst case, there may be a garden variety bear market that typically occurred every 18 to 24 months prior to the recent six-year market run.
Individual Trades
Please click on Home on the left side of the Menu. Scroll down on the Home Page for individual trades.
You are receiving less than 2% of the content from our paid services …TO RECEIVE REMAINING 98%, TAKE A FREE TRIAL TO PAID SERVICES.
Please click here to take advantage of a FREE 30 day trial.
Check out our enviable performance in both bull and bear markets.
