WEEKLY MARKET DIGEST: BULLS CELEBRATE BUT POOR BOND AUCTION AND WARNING SHOT FOR GLOBAL ECONOMY FROM SINGAPORE $DIA $GLD $QQQ $SPY $USO

WEEKLY MARKET DIGEST: BULLS CELEBRATE BUT POOR BOND AUCTION AND WARNING SHOT FOR GLOBAL ECONOMY FROM SINGAPORE $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.

BULLS CELEBRATE BUT POOR BOND AUCTION AND WARNING SHOT FOR GLOBAL ECONOMY FROM SINGAPORE

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

Bulls Celebrate But Poor Bond Auction

While stock bulls celebrate the U. S. government had difficulty selling bonds to finance the deficit. Yesterday’s 30 year bond auction was ugly. It appears that investors do not want to buy bonds because of the higher inflation data that we reported in yesterday’s Morning Capsule.

Wanting Shot From Singapore

Singapore has become an important hub for global trade.  Singapore GDP for second quarter came at 0.1% vs. 1.2% consensus.  This is the slowest growth rate since the second quarter of 2009.

This data is an early warning that a recession may be nearer than generally believed.

PPI

June Core PPI came at 0.3% vs. 0.2% consensus.  This indicates that inflation is running hotter at a time when the Fed is about to cut interest rates. This is not a good combination for the long term.

Poor China Data

China’s June imports fell 7.3% year-over-year vs. a consensus of a fall of 4.5%.  Bulls have been contending that China can handle trade issues because of strong internal demand.  This new data questions bulls’ premise.

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

Oil

The momo crowd is buying oil on partial Gulf of Mexico shutdown due to a storm.  Smart money is selling into the strength.  You may recall that smart money was buying near the recent lows at a time when the momo crowd was aggressively selling.

Marijuana

The momo crowd has huge losses in some marijuana stocks.  The momo crowd is selling 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 positive, the market is overbought and the indicator can easily swing negative.

Interest rates are ticking up and bonds are ticking down.

The dollar is weaker.

Gold futures are at $1410, silver futures are at $15.16, and oil futures are $60.29.

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

DJIA futures are up 78  points.

DEPLOY CASH AND REDUCE HEDGES, POWELL READY TO GIVE A ‘FREEBIE’ TO THE MARKET, HOTTER INFLATION

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

Deploy Cash And Reduce Hedges

Please scroll down to ‘What To Do Now’ section below.  Consider taking these steps opportunistically on  pullbacks.

Powell Ready To Give A Freebie To The Market

Powell appears to be ready to give a freebie to the market in the form of an interest rate cut, needed or not.

In our analysis, this will further inflate the asset bubble and will reduce credibility of the Fed.  In the long run, this is not good for the stock market or the bond market.  However, in the short term, bulls will try to run up the stocks.  Please see this previously published chart for potential targets.   DJIA targets are 29,000 and then 32,000.

Hotter Inflation

Core CPI came at 0.3% vs. 0.2% consensus. This data argues against a rate cut but the Fed seems to be influenced by the politicians and stock market bulls who are demanding a rate cut.

Jobless Claims

Initial Jobless Claims came  at 209K vs. 222K consensus.  This data again argues against a rate cut.

Momo Crowd And Smart Money In Stocks

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

Gold

Gold is running up on prospects of a rate cut and a lower dollar.

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

Oil

Oil is running up due to a storm in the Gulf of Mexico.  Some oil production in the gulf is shutting down.

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

Marijuana

There is no material smart money or momo crowd activity.

Technical Patterns

Oil is tracing a head and shoulders bottom.  This is bullish.  ETF of interest is USO.

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 pull back as the market is overbought.

Interest rates are ticking down and bonds are ticking down after a bond rally yesterday.

The dollar is weaker.

Gold futures are at $1416, silver futures are at $15.23, and oil futures are $60.54.

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

DJIA futures are up 91 points.

STOCKS, BONDS AND GOLD JUMP ON POWELL OUTLINING BAD NEWS

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

Powell Testimony

An advanced text of Powell’s testimony that he will give in front of Congress later today has been released.  Powell is emphasizing various uncertainties that are already well known to investors.  Markets are interpreting the text to mean that the Fed is ready to cut interest rates when it meets later this month.  Stocks, bonds and gold are jumping.

The markets may move again based on Q&A.

FOMC Minutes

FOMC minutes will be released at 2:00 pm ET.  FOMC minutes are often a market moving event but today that is not likely because Powell’s testimony may overshadow them.

Momo Crowd And Smart Money In Stocks

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

Gold

Gold is jumping as the dollar falls in response to Powell’s text.

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

Oil

Oil prices are rising in response to API data.  API reported a draw of 8.129 million barrels vs. 3 million barrel draw consensus.

EIA data will be released at 10:30 am ET and may move oil again.

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

Marijuana

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

Marijuana company KSHB reported higher revenues but wider losses.  KSHB provides ancillary products and services for the marijuana industry.

Technical Patterns

Semiconductors are tracing an inside bar.  This is bullish. ETF of interest is SMH.

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 swing negative if Powell says something good about the economy during Q&A.

Interest rates are ticking down and bonds are ticking up.

The dollar is falling.

Gold futures are at $1408, silver futures are at $15.26, and oil futures are $59.22.

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

DJIA futures are up 117 points.

SELLING AS MORE INVESTORS UNDERSTAND THE FLAW IN BULLS’ LOGIC, INDIA HIKES DUTIES ON GOLD

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

More Investors Understand The Flaw

As more investors understand the flaw in bulls’ logic, they are curtailing stock buying at this time.  Please see yesterday’s Morning Capsule and the Morning Capsule of June 28.

Fed Speak

Several Fed officials are speaking today.  If they say anything significant about the Fed policy, there is potential of  major moves in the stocks, bonds, gold and currencies.  Of course keep in mind the Morning Capsule yesterday regarding Powell’s testimony which may be market moving.

Momo Crowd And Smart Money In Stocks

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

Gold

India has unexpectedly hiked import duties on gold to 12.5% from 10%.  This is significant for the following reasons:

  • India is the second largest buyer of gold.
  • Gold is the second largest import for India.
  • India wants to reduce trade deficit.
  • There is a fair probability of further hikes in duty on gold.
  • Much of gold buying in India is related to cultural events such as weddings and the birth of a child. Indian consumers are very sensitive to the price of gold.

Gold is falling on the news from India.  Unless the dollar weakens, the U. S. stock market falls or other geopolitical issues arise, the gold rally may be capped for the time being because of potentially reduced buying of the physical metal from India.

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

Oil

There is no material momo crowd or smart money activity in oil in the early trade.

Marijuana

There is no material momo crowd or smart money activity in marijuana in the early trade.

Technical Patterns

Several internet related stocks are tracing a top triangle. This is bearish.  ETF of interest is FDN. If deciding to take this trade, consider a fairly tight mental stop.

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 reverse on Fed speak and rumors about Powell’s testimony.

Interest rates are ticking up bonds are ticking down.

The dollar is stronger.

Gold futures are at $1395, silver futures are at $15.07, and oil futures are $57.93.

S&P 500 resistance levels are 3020 and 2900; support levels are 2950, 2925 and 2918.

DJIA futures are down 117 points.

MARKET WAKES UP TO THE BIG FLAW IN BULLS’ LOGIC

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

Market Wakes Up

The stock market is finally beginning to wake up to the big flaw in bulls’ logic.  Wall Street is often too late.  Prudent investors who are able to get ahead of the curve often profit. Over the years, The Arora Report has successfully kept subscribers ahead of the curve.

On June 28th we wrote:

Let us start out with Arora’s Second Law of Investing: Nobody knows with certainty what is going to happen next. Stock market bulls are painting a picture perfect scenario. However there is a big flaw in this scenario. The flaw is the stock market bulls’ assumption that the Fed will aggressively cut rates in the face of removal of a trade war risk, growing economy and growing company earnings. This flies in the face of common sense.
Why would the Fed embark on such a long term disastrous course to further inflate the asset bubble including the stock market, bonds and real estate? Stock market bulls have an answer. The Fed will do so to take out an insurance policy against a natural short term economic decline after a 10 year long expansion and to prevent some air leaking out of the stock market, bond and real estate bubbles.
My answer is worth repeating what I have written before. The debt bubble is getting bigger and will eventually burst. Many investors will get badly hurt. Think of it as a party where almost everybody is drunk and all the drunken people claim that nobody is drunk. I would suggest to investors that they enjoy the party but be aware of the risks ahead.

Many stock bulls have been predicting 50 basis point interest rate cut in July.  After a strong jobs report, such bulls are having second thoughts.  Now they are predicting 25 basis point cut in July.

This change in bulls’ perception is causing a selloff in the early trade.

Important Powell Testimony

Powell’s testimony in front of the Congress is ahead on Wednesday and Thursday.  The testimony and answers to questions will provide us some clues to what the Fed may do.

Important Data Ahead

There is a significant amount of new data ahead before the Fed’s meeting.  In addition to Powell’s testimony, investors ought to carefully watch the new data to project what the Fed may do instead of just being caught up in some preconceived notion of 50 basis point cut.

Turkey

President Erdogan has dismissed the central bank chief.  This is ending central bank’s independence.  Turkish currency and stocks have come under pressure because of this move.  However this does not reduce the upside potential of the Turkish stock market.

Momo Crowd And Smart Money In Stocks

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

Gold

Money is flowing out of stocks and into gold.

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

Oil

Iran’s decision to breach the uranium enrichment agreement is providing some support to oil.

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

Marijuana

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

Technical Patterns

Singapore stocks are tracing a island top.  This is bearish.  ETF of interest is EWS.  If deciding to trade EWS, keep in mind that Singapore stocks are very sensitive to news on the U. S. and China trade.  There is no way to predict such news with any reasonable accuracy 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 negative.

Interest rates are ticking down and bonds are ticking up.

The dollar is weaker.

Gold futures are at $1408, silver futures are at $15.11, and oil futures are $57.62.

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

DJIA futures are down 77 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% – 29% and short to medium-term hedges of  5% – 15% and short term hedges of 0% – 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.

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