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.
FOR A CHANGE, GOOD NEWS ALL AROUND; STOCKS UP ON CHINA DATA, YELLEN AHEAD
This is what you need to know today.
Retail Sales
This year there have been several times when U. S. retail sales have been very weak. There was significant fear of weak retail sales going into today. However there is good news. Retail Sales Ex-Auto came at 0.5% vs. 0.5% consensus.
U. S. Inflation
Core Producer Price Index (PPI) is a leading indicator of inflation as producer prices tend to increase before consumer prices increase. Core PPI came at 0.2% vs. 0.1% consensus. This eases disinflation concerns.
China Rallies Markets Around The World
What a difference a day makes! Yesterday stocks turned sour on weak export data from China. Today stocks across the globe are rallying on inflation data from China.
Producer Price Inflation came at +0.1% vs. -0.3% consensus.
Consumer Price Inflation came at +1.9% vs. +0.5% consensus. This data reduces concerns that China was exporting disinflation around the world.
Yellen Ahead
Yellen will speak at 1:30 pm ET in Boston. She is expected to talk about rate hike later this year. Her speech may be a market moving event.
Markets
Our very, very short-term early stock market indicator is positive.
Dollar is strong.
Interest rates are grinding up and bonds are ticking down.
There is a lot of selling in gold this morning on China data, but gold is still holding above $1250.
Oil is range bound.
Gold futures are at $1252, silver futures are at $17.45, and oil futures are $50.63.
S&P 500 resistance levels are 2150, 2165 and 2180; support levels are 2120, 2100, and 2063.
DJIA futures are up 96 points.
SURPRISE DATA FROM CHINA SOURS THE OPTIMISM, STOCKS IN KEY SUPPORT ZONE
This is what you need to know today.
Surprise Data From China
Surprise negative data from China is souring the optimism. Exports decline 10% year-on-year in dollar terms vs. 3.3% consensus.
FOMC
FOMC minutes indicate that in the September meeting, if it was not for strong intervention by Yellen, interest rates could have been raised.
Stocks In Critical Support Zone
Stocks have now fallen into critical support zone. The bottom of this support zone is 2100. From a technical perspective, any break below 2100 will be negative. On the upside, there has to be a break of 2180 for bullish technical momentum. S&P 500 is trading at 2118 as of this writing.
Thailand
After governing for seven decades, Thai king has passed away. There is a strong probability of turmoil over the coming months. Such turmoil may provide an excellent buying opportunity. Thailand has been continuously covered since 2007 in ZYX Emerging Markets ETF and that is where the signals will be given.
Markets
Our very, very short-term early stock market indicator is negative but a there is a chance for a decent bounce from this support zone. On the other hand if the support zone breaks, it will be very negative for stocks. Please pay attention to ‘What To Do Now’ section below.
Yen is stronger on safe haven buying.
Dollar is strong against most of the currencies.
Oil, gold, silver, interest rates and bonds are range bound.
Gold futures are at $1257, silver futures are at $17.49, and oil futures are $50.07.
S&P 500 resistance levels are 2132, 2150 and 2165; support levels are 2100, 2063, and 2038.
DJIA futures are down 125 points.
FOMC MINUTES ON TAP, THAI KING ILL, RUSSIAN COMMITMENT TO OPEC
This is what you need to know today.
FOMC
FOMC minutes will be released at 2:00 pm ET. This is likely to be a market moving event. Fed Vice Chair Fischer said in a speech on Sunday that rate decision was a close call.
Thailand
Health of Thai king is unstable. The 88 year old king has been the unifying force for a very long time. Stocks fell 6.5% on the news.
Oil
There is a report that Russia has made stronger commitment to OPEC. However oil market is ignoring this bullish news and pulling back. Oil is likely to test the major support at $50.
Pound
British pound rallied after Prime Minister May softened her stance by agreeing to submit her proposal to the Parliament. However the pound started falling again as Brexit Secretary Davis gave his speech.
Stocks
S&P 500 is now sitting at a major support after falling yesterday. The Clinton rally on Monday was short lived. Stocks fell yesterday as polls showed Trump gaining ground and on hard Brexit concerns.
Markets
Our very, very short-term early stock market indicator is neutral.
U. S. dollar is grinding higher.
Gold, silver, bonds and interest rates are range bound.
Gold futures are at $1257, silver futures are at $17.54, and oil futures are $50.47.
S&P 500 resistance levels are 2150, 2165 and 2200; support levels are 2120, 2100, and 2063.
DJIA futures are down 27 points.
EARNINGS SEASON BEGINS, DEMOCRATS SWEEP NOT GOOD FOR STOCKS
This is what you need to know today.
Earnings Season
Earnings season starts today with AA reporting . Expectations are that earnings recession is over.
Democrats Sweep
Markets are celebrating Clinton getting stronger in polls. Looking ahead, if this trend continues, there will be more and more chatter of Democrats sweeping the election. If Democrats control both the White House and Congress, it will not be good for stocks. Stocks do best under a divided government.
Markets
Our very, very short-term early stock market indicator is neutral but expect market to start lower.
Most statements from Russia are supporting oil.
Dollar is stronger against yen and euro.
Interest rates, bonds and gold are range bound.
Gold futures are at $1259, silver futures are at $17.64, and oil futures are $51.32.
S&P 500 resistance levels are 2165, 2200 and 2222; support levels are 2132, 2120, and 2100.
DJIA futures are down 44 points.
PUTIN RALLIES OIL MARKETS OVERALL FAVORING CLINTON AFTER THE DEBATE
This is what you need to know today.
Putin
After being the subject of many comments during the second presidential debate, Putin has come out swinging. Putin says that he is ready to not only freeze oil production but also willing to cut oil production. Oil is surging and adding to the Clinton rally.
Debate
Friday brought the release of a tape showing Trump making vulgar comments about women. Mexican peso surged ahead of the debate and on Trump being asked a question about the tape. Trump gained footing in the debate and performed much better than many had expected threatening to put Clinton in jail if he were president. Verdict of the stock market, yen and euro is that Clinton won. Verdict of peso, yuan and gold is that Trump won.
Markets
Our very, very short-term early stock market indicator is positive.
U. S. dollar is stronger against yen and euro.
Oil is over $50.
Gold is attempting a rally.
Interest rates are ticking higher.
Gold futures are at $1260, silver futures are at $17.65, and oil futures are $50.51.
S&P 500 resistance levels are 2165, 2200 and 2222; support levels are 2132, 2120, and 2100.
DJIA futures are up 96 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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