WEEKLY MARKET DIGEST: FED SEES ECONOMY PICKING UP, MOMO BUYS STOCKS $DIA $GLD $QQQ $SLV $SPY $BTC.X $TBT $USO

WEEKLY MARKET DIGEST: FED SEES ECONOMY PICKING UP, MOMO BUYS STOCKS $DIA $GLD $QQQ $SLV $SPY $BTC.X $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.

THE CHART SETTING UP FOR DOW 30,000 BUT SMART MONEY AND FED MAY SPOIL THE PARTY

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

The Chart Setup

The stock market chart is setting up for a march to Dow 30,000.  We will do a separate post on this topic.

The Smart Money And Momo Crowd

The momo crowd is aggressively buying stocks in the early trade, smart money is lightly selling into the strength.

Gold

Gold is bouncing from oversold condition, overall the trading is listless.

Oil

EIA data was very bullish for oil.  Oil is sustaining the momentum but is at near major resistance level.

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 neutral but expect the market to open higher.

Interest rates, bonds and currencies are range bound.

Gold futures are at $1331, silver futures are at $16.54, and oil futures are $62.66.

S&P 500 resistance levels are 2740, 2765 and 2800; support levels are 2700, 2688, and 2661.

DJIA futures are up 73 points.

FOMC SEES THE ECONOMY PICKING UP MOMENTUM, MOMO CROWD WHIPSAWED

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

FOMC

FOMC minutes showed that the U. S. economy is picking up momentum.  This increases the probability of more rate increases this year.

Momo And Smart Money

The momo crowd aggressively bought stocks after FOMC minutes were released yesterday at 2:00 pm. The momo ran DJIA up over 300 points. The smart money stepped in to lightly sell into the strength, this made a lot of sense as 10-year bond yields edged up to 2.95%.

Smart money selling stopped the upwards momentum and started the down momentum. As the momentum turned negative,  the momo crowd aggressively sold putting the market into a negative territory.

In the early trade this morning, the momo crowd is aggressively buying again.  The smart money is inactive this morning.

Jobless Claims

Initial Jobless Claims came at 222K vs. 229K consensus.  This indicates that employment picture is getting stronger. This is a leading indicator and thus carries heavy weight in our model.  At this particular time in the market, this is an important indicator because as the employment picture strengthens, the Fed is likely to be more aggressive with rate hikes.

China

China is open after the New Year holiday. Chinese stocks overnight show significant strength.

Gold

Gold fell yesterday as dollar strengthened.  Gold moves inverse to the dollar.  As of this writing there is buying coming into gold as the dollar is ticking down.

Oil

API Inventories fell by 900K barrels vs. a consensus of 1.9M barrel rise. This is supporting oil.

EIA data which is considered more authoritative will be released this morning.

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 neutral.

Interest rates are taking a breather after yesterday’s big rise.

Gold futures are at $1328, silver futures are at $16.53, and oil futures are $61.64.

S&P 500 resistance levels are 2740, 2765 and 2800; support levels are 2700, 2688, and 2661.

DJIA futures are up 67 points.

FOMC MINUTES, DOLLAR EXTENDS GAINS, AGGRESSIVE BUYING IN TECH STOCKS

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

FOMC Minutes

FOMC minutes will be released at 2:00 pm ET.  We will be carefully reading the tea leaves for future direction of interest rates.  Please stay extra alert in case there are opportunities.

Dollar Extends Gains

The dollar is extending gains in the early trade reversing the recent weakness.  In theory, as interest rates move up, the dollar should get stronger. However the dollar is being pressured due to concerns for higher deficit resulting from the tax reform.

Aggressive Buying In Tech Stocks

Yesterday saw aggressive buying by the momo crowd in tech stocks, more than the usual. In early trade, the momo crowd is again aggressively buying tech stocks.

Gold

Gold was sold yesterday on strength in the dollar. As of this writing gold is experiencing a bounce from the very, very short-term oversold condition.

Oil

Oil fell yesterday as the smart money sold into strength.

API data will be released at 4:30 pm and may be a market moving event.

Technical Patterns

Canadian shares are tracing a Flag. This is bearish.  ETF of interest is EWC.

Mexican shares are tracing a Flag.  This is bearish.  ETF of interest is EWW.

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 ticking up.

Gold futures are at $1333, silver futures are at $16.51, and oil futures are $61.31.

S&P 500 resistance levels are 2740, 2765 and 2800; support levels are 2700, 2688, and 2661.

DJIA futures are down 9  points.

SPECTER OF THE RED LINE BEING CROSSED THIS WEEK, NOT ALL CLEAR FOR STOCKS

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

The Red Line

The red line is the 3% yield on 10-year Treasury bonds.

The 10-year is currently trading around 2.9%.

A deluge of supply of debt from the U. S. government is coming to the market. The Treasury will auction $151 billion of short-term notes and $28 billion of 2-year debt today.  If the auctions do not go well, expect 10-year yields to also rise and stocks to fall.  On the other hand if the auctions go well, the stocks and bonds are set up for a relief rally.

The last time 10-year yield reached 3% on a closing basis, was in 2013.

All Not Clear

Our message in Morning Capsules and other writings has been that looking ahead the next few months, it is not all clear yet.  Further, our message has been if you were uncomfortable at the depth of the correction, consider taking advantage of the strength in the market to trim some positions.

We took advantage of the strength to raise come cash and establish hedges.  Previously, at the depth of the correction, we deployed a little bit of cash (bought) and took profits on some hedges (sold).

Short Squeeze

We have been sharing with you that a big part of the recent rally was short squeeze and that short squeezes end.

The short squeeze has ended now.  At least temporarily this source of fuel to propel the market up is exhausted.

Gold

Gold is coming under pressure as the dollar rises.

Oil

The smart money is lightly selling oil but the momo crowd is buying.

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 negative.

Interest rates are ticking up and bonds are ticking down.

Gold futures are at $1339, silver futures are at $16.48, and oil futures are $61.67.

S&P 500 resistance levels are 2740, 2765 and 2800; support levels are 2700, 2688, and 2661.

DJIA futures are down 173  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% – 30% and short to medium-term hedges of  15% – 25% and very short term hedges of 10%.

 

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