WEEKLY MARKET DIGEST: COHN TRADE TRUMPS TRUMP, FED SPLIT, SAFE HAVEN DEMAND FOR GOLD $DIA $GLD $QQQ $SLV $SPY $TBF $TBT $USO

WEEKLY MARKET DIGEST: COHN TRADE TRUMPS TRUMP, FED SPLIT, SAFE HAVEN DEMAND FOR GOLD $DIA $GLD $QQQ $SLV $SPY $TBF $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.

COHN TRADE TRUMPED, TERROR EFFECT TENDS TO BE TEMPORARY, GOLD CROSSES $1300

This is what you need to know today.

Cohn Trade Trumped

Wall Street has been out in full force Trumping the ‘Cohn trade.’  Gary Cohn is an advisor to Trump and leading the tax reform proposals.  Wall Street loves Gary Cohn because he is one of their own.  Cohn was a Goldman Sachs executive.

In our analysis, the market is overbought and is vulnerable.  Overbought markets look for excuses to sell off.

A relative calm is prevailing as of this writing.  What happens today in the stock market will depend on statements from Trump and other prominent Republicans.  If there are no new negative statements, the market may stabilize or even bounce.  On the other hand, technically the market is sitting right at a key support zone of  2420 to 2430 with 2425 being the mid-point.  If this level breaks, technically oriented traders will start selling driving the market lower.

Effects Of Terror Tend To Be Temporary

Our thoughts and prayers go out to those affected by this terrorist attack.

Terrorism in Spain is causing negative sentiment.  If history is any guide, effects of terrorism on stocks tend to be temporary.

Gold Crosses $1300

Demand for safe haven after Trump troubles and terrorism has driven gold over $1300 resistance level.  There is a lot of excitement in the momo crowd.  A short squeeze can take gold much higher.  However the ‘smart money’ is not active in gold this morning.

Technical Patterns

Several industrial stocks are tracing a Diamond Top. This is bearish.  ETF of interest is .

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 down and bonds are higher on safe haven demand.

There is slight weakness in dollar.

Some light buying is coming into oil.

Gold futures are at $1301, silver futures are at $17.19, and oil futures are $47.34.

S&P 500 resistance levels are 2450 and 2500; support levels are 2425, 2400, and 2363.

DJIA futures are down 9  points.

FED SPLIT MOVES THE MARKETS, ECB CURRENCY CONCERNS, CEOS ABANDON TRUMP, ZINC AT 10 YEAR HIGH

This is what you need to know today.

Fed Split Moves The Markets

FOMC minutes show that the Fed is split.  Some members are concerned that inflation may overshoot the 2% target while others are concerned that the risk to inflation is to the downside.

Our analysis is that the Fed’s inflation model is obsolete and no longer works.

In totality, market participants viewed minutes as dovish.  This sent stocks, gold, bonds and commodities higher.

ECB Currency Concerns

European Central Bank minutes have just been released.  The minutes show that ECB is concerned about strength in euro.  Euro is slumping on the minutes.

CEOs Abandon Trump

CEOs in large numbers are abandoning Trump.  Trump has disbanded his two business advisory councils.

Our analysis is that this is hurting Trump’s pro business image and may make it difficult to get Trump’s agenda through the Congress.

Gold

Gold is very sensitive to interest rates.  Gold is being bought aggressively on dovish Fed.

Metals On Fire

Metals are on fire primarily based on speculation by day traders in China.

Zinc went over $3000 a metric ton, a 10-year high.

Iron ore futures went up over 5%.

Aluminum hit a six-year high.

Oil

Oil is being sold after data showed higher than the consensus build in inventories.

Our analysis is that conditions are setting up for a short squeeze.

Technical Patterns

Mexican stocks are tracing a Hanging Man. This is bearish.  ETF of interest is .

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.

Bonds are stronger and interest rates are ticking down on dovish Fed.

Gold futures are at $1291, silver futures are at $17.02, and oil futures are $46.66.

S&P 500 resistance level is 2500; support levels are 2450, 2425, and 2400.

DJIA futures are  down 32  points.

PAY ATTENTION TO THIS NEW NEGATIVE DATA, EURO-AREA GROWTH, FOMC MINUTES, GOLD HIGHER ON TRUMP CONTROVERSY

This is what you need to know today.

Pay Attention To This New Negative Data 

As this bull market continues, prudent investors keep an eye on the risks.  Investors who got lulled into the bullishness and forgot about the risks lost 50% of the value of their portfolios and often more in 2008.  The 2008 event was related to housing.

Housing is the pillar of the U. S. economy.  It is important to pay attention to leading indicators and not lagging indicators related to housing.

There is a negative surprise in the data just released.  July housing starts came at 1155K vs. 1217K consensus.

Building permits came at 1223K vs. 1247K consensus.

As usual, we will be keeping a close eye on this data along with hundreds of other critical data points from the globe so that subscribers to The Arora Report continue to generate significantly higher returns than the market while taking lower risks.

Euro-Area Growth

Euro-area growth GDP came at 0.6% vs. 0.6% consensus.  digging below the surface, there is a lot of good news here.  Italy, long known as the sick man of Europe, had tenth consecutive quarter of growth.  Spanish economy is picking up speed.  The growth is no longer limited mostly to Germany and northern European economies.

FOMC Minutes

FOMC minutes will be released at 2:00 pm ET.  We will be carefully scrutinizing these minutes for details of the unwinding of the Federal Reserves’ massive $4.5 trillion balance sheet.  How this is done will have major implications for both stock and bond markets.

Buying In Gold On Trump Controversy

There is a new controversy from Trump’s remarks related to neo-Nazi rally in Virginia.  The concern is that Trump might lose support among Republicans making it difficult to implement the Trump agenda.

Gold is seeing strong buying on the controversy.

Gold is recovering from yesterday’s aggressive selling. Note that there is no significant buying in silver.

Technical Patterns

Many mining stocks are tracing a Head And Shoulders Top.  This is bearish.  ETF of interest is .

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 down and bonds are ticking up on Trump controversy.

Currencies and oil are range bound.

Gold futures are at $1275, silver futures are at $16.66, and oil futures are $47.56.

S&P 500 resistance level is 2500; support levels are 2450, 2425, and 2400.

DJIA futures are up 49 points.

A BIG SURPRISE IN ECONOMIC DATA HURTS GOLD AND BONDS, GOOD FOR STOCKS; SELLING IN OIL

This is what you need to know today.

Surprise In Economic Data

This morning there is a big surprise in economic data.  July Retail Sales ex-auto came at 0.5% vs. 0.3% consensus.  This is very encouraging for the U. S. economy because lately retail sales have been weak.  Even department store sales are up according to this data.

The U. S. economy is about 70% based on consumer, therefore, it is important to pay attention to retail sales.

We take autos out because data on autos is very noisy and makes predictions difficult in a scientific manner.

Empire Manufacturing came at 25.2 vs. 13 consensus.  This is again a very strong piece of economic data.

Gold And Bonds Hurt

Gold and bonds were already vulnerable due to lessening tensions with North Korea.  The strong economic data is hurting gold and bonds.

Good For Stocks

In the long run strong economic data is good for stocks.  However in the very, very short-term, it increases the probability of a rate increase by the Fed and this may lead to a correction.

Oil

Oil is being aggressively sold.  There are over-supply concerns in the market.

Technical Patterns

Bonds are tracing an Inside Bar. This is bearish.  ETFs of interest are , , and .

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.

Dollar is strengthening on strong economic data.

Yen is weakening on cooling tensions.

Korean won is stronger.

Gold futures are at $1274, silver futures are at $16.68, and oil futures are $47.15.

S&P 500 resistance level Is 2500; support levels are 2450, 2425, and 2400.

DJIA futures are up 53  points.

COOLER HEADS AND U. S. ASSURANCE TO S. KOREA CAUSING AGGRESSIVE BUYING IN STOCKS AND SELLING IN GOLD

This is what you need to know today.

South Korea

Over the weekend, cooler heads seem to be prevailing over North Korea.  U. S. has assured South Korea that war is not imminent and there is an effort underway for a diplomatic solution.

Aggressive Buying In Stocks

There is aggressive buying in stocks on cooling tensions.  The buying is likely to spill over when the regular market opens.

Selling In Gold

There is aggressive selling in gold as demand for safe haven declines.

Oil

Oil is range bound.

Economic Data

There is a fair amount of economic data coming this week that will move the markets.

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.

On declining safe haven demand, bonds are falling and interest rates are rising; yen is weaker and dollar is stronger.

Gold futures are at $1286, silver futures are at $16.97, and oil futures are $48.60.

S&P 500 resistance level is 2500; support levels are 2450, 2425, and 2400.

DJIA futures are up 94 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 27 – 38% of assets in cash or treasury bills, and short to medium-term hedges of  25% and very short term hedges of 5%.

 

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