WEEKLY MARKET DIGEST: GOLD BUYING AFTER ATTACK ON TANKERS, FED WALK BACK RISK IN THE STOCK MARKET $DIA $GLD $QQQ $SLV $SPY $TBT $USO

WEEKLY MARKET DIGEST: GOLD BUYING AFTER ATTACK ON TANKERS, FED WALK BACK RISK IN THE STOCK MARKET $DIA $GLD $QQQ $SLV $SPY $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.

A NEW NEGATIVE SEMICONDUCTOR DATA POINT, POOR CHINA DATA, GOOD RETAIL SALES, BUYING IN GOLD ON IRAN

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

A New Negative Semiconductor Data Point

Semiconductors are the life blood of the digital economy. Most hard data points over the last few months have been negative for semiconductors.  However on every negative data point, gurus came out of the woodwork and proclaimed that the negative data point was the bottom; so far the market has ignored the negative data points and runs on hope.  Now there is another new negative data point in semiconductors.  AVGO, a large diversified semiconductor company, reported earnings and projections below the whisper numbers.  The conference call also threw cold water on the prevailing wisdom that the bottom has already occurred or is near.

Gurus are beginning to come out and make positive pronouncements for the future.  Will the stock market ignore the negative data again and run on hope?

Poor China Data

Industrial output in China grew 5.0% in May year-over-year vs. consensus of 5.5%.  This is the weakest reading since 2002.

Good Retail Sales

Retail Sales Ex-auto came at 0.5% vs. 0.4% consensus.  The U. S. economy is about 70% consumer based.  For this reason this is an important number.

Momo Crowd And Smart Money In Stocks

The momo crowd is selling stocks in the early trade.  Smart money is inactive.

Gold

There is buying in gold on increased tensions with Iran.  The U. S. is providing a video showing an Iranian boat potentially responsible for one of the tanker attacks.  We shared the news of this attack with you yesterday.

Gold has crossed the psychological resistance at $1350.  As of this writing, silver is trying to break the psychological resistance at $15.00.

The momo crowd is aggressively buying gold.  Smart money is inactive.

Oil

The momo crowd is acting like a yo-yo in oil.  Smart money is inactive.

Oil will move based on news related to Iran.

Marijuana

There is no discernable smart money or momo crowd activity in marijuana.

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 down and bonds are ticking up.

Currencies are range bound.

Gold futures are at $1356, silver futures are at $15.09, and oil futures are $52.18.

S&P 500 resistance levels are 2918, 2925 and 2950; support levels are 2860, 2840 and 2800.

DJIA futures are up 45 points.

STOCK MARKET BULLS PAY ATTENTION TO THE YELLOW SIGNAL FROM SMALL-CAPS, OIL TANKER IS ATTACKED

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

Yellow Not Red Signal

At a time when the stock market is staying bullish, small-caps are sending a yellow signal and indicating a potential recession ahead. Stock market bulls ought to pay attention. Let’s explore with the help of a chart.

Please click here for a chart of S&P 500 ETF (SPY) (top pane), Nasdaq 100 ETF (QQQ) (bottom pane) and small-cap ETF (IWM) (middle pane). Please note the following:

  • A chart of Dow Jones Industrial Average (DJIA) looks similar to the chart of S&P 500 index (SPX) represented by ETF (SPY). Dow Jones Industrial Average contains large caps.
  • In the recent rally, small-caps have significantly underperformed.
  • Since small-caps are mostly domestic and the market is concerned about the trade war, from one perspective, small-caps should have over performed.
  • Small-caps have also underperformed popular tech stocks such as Apple (AAPL), Google (GOOG) (GOOGL), Facebook (FB), Intel (INTC) and AMD(AMD). Popular tech stocks have problems ranging from trade war to antitrust investigations.
  • Small-caps often underperform going into a recession. The reason is that balance sheets of small-caps are often not strong and borrowing becomes difficult in a recession. Further, small-caps cannot cushion a domestic recession with overseas earnings.

At this time, small-cap under performance is a yellow signal not a red signal for the stock market. The reason is that the small-cap index contains a large number of financials. Financials may get hurt by the inverted yield curve. Under some circumstances, inverted yield curve itself is a signal of recession; but no conclusions can be drawn at this time because of the extraordinary policies of the Fed.

Please pay attention to ‘What To Do Now’ section below.

Jobless Claims

Initial Jobless Claims came at 222K vs. 220K consensus.

Momo Crowd And Smart Money In Stocks

The momo crowd is aggressively buying stocks in the early trade.  Smart money is inactive.

Gold

The momo crowd is aggressively buying gold.  Smart money is inactive.

Oil

Two tankers have been attacked in the Gulf of Oman.  This is causing a rise in oil after very bearish EIA data yesterday.

The momo crowd is aggressively buying oil. Smart money is inactive.

Marijuana

The momo crowd is buying marijuana stocks.  Smart money is inactive.

Technical Patterns

Marijuana stocks are tracing a flag.  This is bearish. ETF of interest is MJ.

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.

The dollar is weaker.

Gold futures are at $140, silver futures are at $14.81, and oil futures are $53.24.

S&P 500 resistance levels are 2918, 2925 and 2950; support levels are 2860, 2840 and 2800.

DJIA futures are up 71  points.

THE FED MAY NEED TO WALK BACK OVERBLOWN RATE CUT EXPECTATIONS, CRUDE INVENTORY BUILD

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

The Risk

The market has priced in 75 basis point rate cut in 2019.  Some are even calling for a 50 basis point cut in June or July.

In our analysis, even though economic indicators show a slowing economy, the rate cut expectations are overblown unless the data shows further weakness.  If the data does not show further weakness, the Fed will have to walk back aggressive rate cut expectations.  Such potential walk back poses one of the bigger risks to the stock market.

Momo Crowd And Smart Money In Stocks

The momo crowd is selling stocks in the early trade.  Smart money is inactive. This may change after the release of CPI data.  If there is a significant change, we will do another post later in the day.

Gold

The momo crowd is buying gold.  Smart money is inactive.

Protests in Hong Kong are in part leading to buying in gold.

Oil

API reported a build in crude inventories of 4.852 million barrels vs. consensus of a draw down of 481K barrels.  Oil is falling on this surprise inventory build.

The momo crowd is selling oil.  Smart money is inactive.

Marijuana

The momo crowd is buying marijuana stocks.  Smart money is inactive.

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 down and bonds are ticking up.

Currencies are range bound.

Gold futures are at $1338, silver futures are at $14.77, and oil futures are $51.90.

S&P 500 resistance levels are 2918, 2925 and 2950; support levels are 2860, 2840 and 2800.

DJIA futures are down 53 points.

MOMO CAUSING A SHORT SQUEEZE IN THE STOCK MARKET

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

Short Squeeze

Aggressive buying by the momo crowd is causing a short squeeze in the stock market.  This is exaggerating the up move.

The past is not a guarantee of the future.  Historically such action occurs near a very, very short term top; often the top is no more than a 2% – 3%.  Of course this time the other factors such as trade war and a break out in the S&P 500 along with the Fed can extend the rally.

Momo Crowd And Smart Money In Stocks

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

Gold

The momo crowd is selling gold.  Smart money is inactive.

Oil

There is no discernable smart money or momo crowd activity in oil.

Marijuana

The momo crowd is aggressively buying marijuana stocks in the early trade. The smart money is inactive.

Technical Patterns

Small caps are tracing a shooting star. This is bearish. The ETF of interest is IWM.

Stocks in Turkey are tracing a head and shoulder bottom.  This is bullish.  The ETF of interest is TUR.

Russian stocks are tracing a hanging man. This is bearish.   The ETF of interest is RSX.

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 strongly higher.

Interest rates are ticking down and bonds are ticking up.

The dollar is slightly stronger.

Gold futures are at $1326, silver futures are at $14.69, and oil futures are $53.93.

S&P 500 resistance levels are 2918, 2925 and 2950; support levels are 2860, 2840 and 2800.

DJIA futures are up 152  points.

MEXICO DEAL, CHINA EXPORTS AND TRUMP COMMENTS CREATE OPTIMISM

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

Mexico Deal

A last minute deal with Mexico has averted tariffs.  This is creating optimism in stocks.

China Data

China’s May exports rose 1.1% year over year vs. consensus of a decline of 3.8%.  The market has latched onto this positive data.   In our analysis, in view of U. S. tariffs, this data makes sense only if China has been able to circumvent the tariffs such as making shipments to the U. S. via a third country.

The market is ignoring China’s import data.  Chinese imports fell 8.5%, the largest drop since July 2016.

Trump Comments

Trump is making optimistic comments about a deal with China.  This is also helping the stock market.

Momo Crowd And Smart Money In Stocks

The momo crowd is aggressively buying stocks.  Smart money is lightly selling into the strength.

Gold

The momo crowd is selling gold.  Smart money is inactive.

Oil

The momo crowd is buying oil.  Smart money is inactive.

Marijuana

The momo crowd is buying marijuana stocks in the early trade.  Smart money is inactive.

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 positive.

Interest rates are ticking up and bonds are ticking down.

The dollar is weaker.

Gold futures are at $1333, silver futures are at $14.73, and oil futures are $67.94.

S&P 500 resistance levels are 2918, 2925 and 2950; support levels are 2860, 2840 and 2800.

DJIA futures are up 128 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 24% – 34% and short to medium-term hedges of  10% – 20% and short term hedges of 10% – 20%.

 

A knowledgeable investor would have turned $100,000 into over $1,000,000 with the help from The Arora Report. NOW YOU TOO CAN ALSO SPECTACULARLY SUCCEED AT MEETING YOUR GOALS WITH THE HELP OF THE ARORA REPORT. You are receiving less than 2% of the content from our paid services. …TO RECEIVE REMAINING 98% INCLUDING MANY ATTRACTIVE INVESTMENT OPPORTUNITIES, TAKE A FREE TRIAL TO PAID SERVICES.

Please click here to take advantage of a FREE  30 day trial.

Check out our enviable performance in both bull and bear markets.

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