WEEKLY MARKET DIGEST: CONFIDENCE HIGHEST SINCE 2001, WATCH OUT FOR WINDOW DRESSING AND REBALANCING $DIA $GLD $QQQ $SLV $SPY $TBF $TBT $USO

 WEEKLY MARKET DIGEST: CONSUMER CONFIDENCE HIGHEST SINCE 2001, WATCH OUT FOR WINDOW DRESSING AND PENSION REBALANCING $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.

CROSS CURRENTS IN STOCKS, GOLD RISES AS DOLLAR DECLINES

This is what you need to know today.

Cross Currents

Buying from window dressing is being negated by pension fund rebalancing.  Liquidity is very low in stocks.

Jobless Claims

Initial Jobless Claims came at 265K vs. 263K consensus.  This is a leading indicator and has a heavy weight in our models.

Gold Strengthens

Gold is strengthening on dollar weakness.  Gold is now approaching strong resistance in the zone of $1150 to $1158.

Oil And Natural Gas

Inventories for both oil and natural gas will be released this morning.  Natural gas is on a tear.  Oil is range bound.

Markets

Our very, very short-term early stock market indicator is neutral.

Bonds are rising and interest are ticking down.

Gold futures are at $1146, silver futures are at $16.09, and oil futures are $53.86.

S&P 500 resistance levels are 2250, 2288 and 2300; support levels are 2222, 2200, and 2180.

DJIA futures are down 2 points.

CONSUMER CONFIDENCE HIGHEST SINCE 2001 BUT GOLD DOES NOT BUDGE, WATCH OUT FOR WINDOW DRESSING AND PENSION REBALANCING

This is what you need to know today.

Consumer Confidence

Consumer Confidence Index came at 113.7 vs. 109.8 consensus. This is the highest level since 2001.

Gold

Historically gold falls when consumer confidence goes higher.  This time not only gold did not budge, it is attempting to rally.  The reason is that selling in gold has completely dried up.

Window Dressing

In window dressing money managers buy stocks that have done well this year to show their clients in their year end reports that they own the best performing stocks.  During this holiday period, due to low liquidity it is easy to run such stocks higher with little buying.  The flip side is that this is an artificial construct and this buying will disappear next year.

Temporarily this is a positive influence in the market.

Pension Rebalancing

Pension funds typically have a fixed allocation between stocks and bonds and they rebalance it at the end of the year.  Since stocks have run up and bonds have fallen, expect pension funds to sell stocks and buy bonds to rebalance.

This is a negative influence in the market and most likely to occur on Friday.

Dow 20,000

Mom and pop are excited about Dow 20,000 and are sending money to their favorite mutual funds.

This is a positive influence in the market.

Markets

Our very, very short-term early stock market indicator is neutral but expect the market to start out positive.

Aggressive buying is seen in oil, selling has dried up.

Earlier today euro broke support at $1.04 before recovering.

Bonds and interest rates are range bound.

Gold futures are at $1139, silver futures are at $15.96, and oil futures are $54.10.

S&P 500 resistance levels are 2288, 2300 and 2334; support levels are 2250, 2222, and 2200.

DJIA futures are up 38 points.

QUIET POST HOLIDAY TRADING, SELLING IN PRECIOUS METALS AND OIL DRYS UP

This is what you need to know today.

Trading in stocks, bonds, currencies and most commodities is quiet in the post holiday environment.

Gold, silver and oil are moving up as selling has totally dried up.  Buying is very mild but due to lack sellers, prices are lifting up.

Natural gas is moving higher in  short squeeze.

Markets

Our very, very short-term early stock market indicator is neutral but market can be easily pushed in either direction due to low liquidity.

Gold futures are at $1142, silver futures are at $15.91, and oil futures are $53.52.

S&P 500 resistance levels are 2288, 2300 and 2334; support levels are 2250, 2222, and 2200.

DJIA futures are up 10 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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