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(The Weekly Digest reproduces the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers. ) 

MORNING CAPSULE: STOCKS SHOW REMARKABLE RESILIENCE, GOLD HOLDS GAINS

The way stocks came back yesterday  show  this stock market is remarkably resilient. In early trade, stocks are mostly changed.Gold is  holding gains  in the early trade. However be cautious because the logic behind the move is false as explained in yesterday’s morning capsule.

Interest rates are near lows.

Oil is slightly pulling back.

Gold futures are at $1337, silver futures are at $21.48, and oil futures are $102.15.

S&P 500 resistance levels are 1975, 2000  and  2017 ; support levels are 1950, 1925 and 1900.

DJIA futures are down 8 points.

 

 

MORNING CAPSULE: GLOBAL STOCK SELL OFF AS THE FED STOPS BOND BUYING, GOLD JUMPS ON FALSE LOGIC

The fed will stop buying bonds under QE in October.  After initial positive reaction, investors are having second thoughts.Adding to the negativity this morning are weak trade data from China and troubles at a Portuguese bank. As of this writing, a global sell off in stocks is in full swing.

Gold bulls prove wrong on India cutting import duties.  India surprised the markets by leaving duty unchanged at 10%.  We are not surprised, from earlier Morning Capsule,

The impetus seems   to be that India will eliminate import duties on gold in the upcoming budget. There is no way to know for sure what the government in India will do. However contrary to the belief among American momo crowd,  our analysis of the informed sources in India close to the government  shows that elimination of duty is not certain.

Gold in dollar terms jumps on false logic.  Since there is a 10% duty to import gold in India, gold in rupee terms  in India should have risen by about 3%. Gold market in India responded rationally, Aug gold contract in India rose by about 3%.  However the corresponding rise in gold in international markets is based on false logic. Based on Indian duties, gold in international markets should trade 2-3% lower than in India.  Momo  crowd that is aggressively buying gold this morning has never been known for deep analysis.

No buying by smart money in gold is being seen as of this writing. A small part of the rise in gold is rationally attributable to technical breakout from $1333,  troubles at a bank in Portugal and hot money moving away from equities to gold.

The budget, a key event in India, is in line with expectations. However Indian stock market is very overbought. Our analysis and change in our rating on India will be available late today in ZYX EMERGING MARKETS ETF ALERT. Both oil and interest rates are falling.

Gold futures are at $1344, silver futures are at $21.53, and oil futures are $101.95.

S&P 500 resistance levels are 1975, 2000  and 2017 ; support levels are 1950 1925, and 1900 .

DJIA futures are down 136  points.

 

MORNING CAPSULE: GOLD ETF GLD HOLDINGS CROSS 800 TONS, STOCKS REBOUNDING

There are significant inflows into gold ETF  GLD, holdings have now crossed 800 tons. GLD is a favorite vehicle of North American  momo crowd. Fed minutes will be released this afternoon. The Chairperson Yellen is dovish, but the minutes will provide views of all FOMC members. Overall the minutes are likely to be balanced and not dovish. How gold responds will be a tell.

Yesterday’s sell off in stocks was ugly for the momo crowd, high flyers were hit hard. In pre-market trading, stocks are staging a rebound.

Oil continue to fall.

Interest rates are hovering near yesterday’s lows.

Gold futures are at $1327, silver futures are at $21.21, and oil futures are $103.03.

S&P 500 resistance levels are 1975, 2000 and 2017 ; support levels are 1950, 1925 and 1900 .

DJIA futures are up 15 points.

MORRNING CAPSULE: SHADES OF 2011-12 IN GOLD, MOMO CROWD BUYING AGGRESSIVELY ON INDIA SPECULATION

Our algorithms have been detecting aggressive buying  of gold by the momo crowd  in a pattern that is similar to  the last quarter of 20011 to first half of 2012.  Interestingly most of this buying is not happening in  India, China or Russia but in North America. The impetus seems   to be that India will eliminate import duties on gold in the upcoming budget. There is no way to know for sure what the government in India will do. However contrary to the belief among American momo crowd,  our analysis of the informed sources in India close to the government  shows that elimination of duty is not certain.  There may be only reduction in duties.At this time it is difficult to ascertain what scenario is already discounted in the price of t gold — elimination of duty or reduction of duty. Let us also not forget that often the reaction in the market is to ‘sell the news.’

There is a strong correlation between quality of Monsoon rains and gold demand in India. When rains are good, farmers in India  feel richer and buy gold with excess cash. In June, rains in India were below expectations. The main Monsoon season is July and August.

Our gold ratings may change.

Oil is staying below $104.

Interest rates are falling.

Stocks are slightly weaker in the pre-market.

Gold futures are at $1324, silver futures are at $21.17, and oil futures are $103.55.

S&P 500 resistance levels are 1975, 2000, and 2017; support levels are 1950, 1925, and 1900.

DJIA futures are  down  31  points.

MORNING CAPSULE: OIL AND GOLD FALL IN EARLY TRADE AS LIBYA BLOCKADE ENDS

Libyan government has reached an agreement with rebels to lift the blockade on oil export terminals.  Oil is falling in response.Pro Russian rebels are being pushed back by Ukrainian forces; gold is falling as there is no sign of Russian intervention.

The market is coming around to the idea that Baghdad will not fall.

Stocks are listless in early trade  post holiday.

Interest rates are range bound.

Gold futures are at $1315, silver futures are at $20.94, and oil futures are $103.94.

S&P 500 resistance levels are 1975, 2000, and 2017; support levels are 1950, 1925, and 1900.

DJIA futures are DOWN 37  points

 

 

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