(The Weekly Digest reproduces the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers. )
ECONOMIC STRENGTH UNDER THE HEADLINES, OIL GLUT TO CONTINUE TO THE END OF 2016, IEA SPOILS THE PARTY
This is what you need to know today.
In the U. S., a fair amount of economic data has been released this morning. Do not be fooled by the headlines that speak of weakness. Under the headlines the data shows strength.
As our long time subscribers know, our models look at Core PPI and not on headline PPI. Core PPI came at 0.3% vs. 0.1% consensus. This is good news in that it will help the Fed raise interest rates on December 16th.
Advance Retail Sales ex-Auto came at 0.5% vs. 0.4% consensus. As our long term readers know, our models exclude autos because the high volatility of auto sales distracts from the underlying consumer behavior.
According to International Energy Agency (IEA), crude glut will continue to the end of 2016 if OPEC continues to pump at the present rate.
IEA has spoiled the party that stocks engaged in yesterday. Yesterday’s rally in stocks was partially due to some gurus turning bullish on oil. This morning IEA throws cold water on oil bulls projections.
Gold and silver have now fully given up the gains from the short squeeze that started last Friday.
Interest rates are falling and bonds are rising as investors flee stocks into the safety of Treasuries. However, this move by investors is ill-conceived in our analysis. It is only a matter of time before Smart Money starts looking at stronger Core PPI and starts selling bonds.
Dollar is range bound but it is likely to resume its strength unless another short squeeze develops.
Our very, very short-term early stock market indicator is negative.
What To Do Now?
It is important for investors to look ahead and not in the rear view mirror.
Consider only adding new positions per new posts since October 1st.
Consider continuing to hold existing positions. Based on individual risk preference, continue to hold 30-50% cash or hedges.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.
Gold futures are at $1063, silver futures are at $13.92, and oil futures are $36.38.
S&P 500 resistance levels are 2063, 2100, and 2111; support levels are 2017, 2000, and 1962.
DJIA futures are down 165 points.
IN A GOOD DEVELOPMENT, INSTITUTIONS DUMP STOCKS
This is what you need to know today.
This year for the first time, institutions dumped a large amount of stocks in a matter of four hours.
This is a good development for the following reasons:
- The dumping appears to be pre-planned.
- There was no panic in the selling.
- Most of the selling was in momo crowd’s favorite stocks. These stocks are in a bubble and some cleansing is good.
- Of course we welcome selling because our objective is to buy stocks at lower prices.
In South Africa, the finance minister is fired as its currency, rand, is decimated. South African 10 year bonds break 10%.
Bank of England keeps rates on hold and issues a statement more dovish than the consensus; sterling is getting hit.
Oil breaks $37 in early trading.
The Japanese yen continues to strengthen.
Gold and silver continue to stay levitated on weak dollar.
Interest rates and dollar are range bound.
Our very, very short-term early stock market indicator is neutral.
What To Do Now?
It is important for investors to look ahead and not in the rear view mirror.
Consider only adding new positions per new posts since October 1st.
Consider continuing to hold existing positions. Based on individual risk preference, continue to hold 30-50% cash or hedges.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.
Gold futures are at $1071, silver futures are at $14.14, and oil futures are $36.91.
S&P 500 resistance levels are 2063, 2100, and 2111; support levels are 2038, 2017, and 2000.
DJIA futures are up 24 points.
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.
DOLLAR FALLS, CHINA SETS YUAN TO FOUR YEAR LOW, MEGA MERGER OF AMERICAN ICONS IN WORKS
This is what you need to know today.
Currency traders are aggressively selling dollar and buying yen and euro. The move is being exasperated as stops hit.
When China gained reserve status for its currency yuan, we shared with you our analysis that it is only a matter of time before China starts a new round of manipulation. Now that call has proven to be spot on. The People’s Bank of China (PBOC) lowered the yuan fix to 6.4140 per dollar. This is the lowest since August 2011.
Unlike other reserve currencies, Chinese yuan does not freely trade. It is PBOC that arbitrarily determines its rate vs. the dollar. This move is going to discourage money flowing into China.
The mega merger of two American icons, DD and DOW, is in the works. The potential merger is being prompted by falling oil prices and falling prices of agrichemicals. Opportunities arising from this mega merger will be published in ZYX Buy or ZYX Short as appropriate.
Gold, silver, copper and other commodities other than oil and natural gas are strengthening on the weaker dollar.
Interest rates and bonds are range bound.
Our very, very short-term early stock market indicator is neutral.
What To Do Now?
It is important for investors to look ahead and not in the rear view mirror.
Consider only adding new positions per new posts since October 1st.
Consider continuing to hold existing positions. Based on individual risk preference, continue to hold 30-50% cash or hedges.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.
Gold futures are at $1082, silver futures are at $14.27, and oil futures are $37.63.
S&P 500 resistance levels are 2100, 2111, and 2132; support levels are 2038, 2017, and 2000.
DJIA futures are down 28 points.
CHINA SPOILS THE PARTY AGAIN AND SOUTH AFRICA ASSISTS
This is what you need to know today.
Dismal trade data from China is spoiling the party. November Trade Balance came at $54.1 billion vs. $64 billion consensus; exports fell 6.8% vs. -5% consensus.
The South African rand hit the lowest level ever against the dollar. South African economy is heavily dependent on commodities including gold.
On the positive side, Japan barely shirked recession; Q3 GDP came at 0.3% vs. 0% consensus.
Oil continues in free fall, now trading below $37.
Gold and silver have given up a bulk of the gains from the short squeeze from Friday.
Interest rates are falling as investors are rushing into the safety of U. S. Treasuries.
Dollar is weaker as interest rates fall and Japanese economy did better than the consensus.
Our very, very short-term early stock market indicator is negative.
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.
What To Do Now?
It is important for investors to look ahead and not in the rear view mirror.
Consider only adding new positions per new posts since October 1st.
Consider continuing to hold existing positions. Based on individual risk preference, continue to hold 30-50% cash or hedges.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.
Gold futures are at $1069, silver futures are at $14.07, and oil futures are $36.78.
S&P 500 resistance levels are 2100, 2111, and 2132; support levels are 2038, 2017, and 2000.
DJIA futures are down 174 points.
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.
BATTLE ROYALE BETWEEN SMART MONEY AND THE MOMO CROWD, OIL IN FREE FALL
This is what you need to know today.
There is a battle royale going on between the Smart Money and the momo crowd. It is common for the momo crowd to win in the very short-term, but in the long term Smart Money almost always wins.
At present, Smart Money is winning in junk bonds, U. S. value stocks, Japan, Europe, oil, copper and several other commodities.
At present, the momo crowd is winning in U. S. high beta stocks, gold and silver.
The battle in currencies, bonds and emerging markets is totally indecisive in the very short-term.
Oil is in free-fall.
Momo crowd is aggressively buying gold and silver, but Smart Money is likely selling gold and silver.
Interest rates are range bound.
Dollar is beginning to strengthen.
Our very, very short-term early stock market indicator is neutral.
What To Do Now?
It is important for investors to look ahead and not in the rear view mirror.
Consider only adding new positions per new posts since October 1st.
Consider continuing to hold existing positions. Based on individual risk preference, continue to hold 30-50% cash or hedges.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.
Gold futures are at $1079, silver futures are at $14.48, and oil futures are $38.69.
S&P 500 resistance levels are 2100, 2111, and 2132; support levels are 2063, 2038, and 2017.
DJIA futures are down 30 points.
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.
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