WEEKLY MARKET DIGEST: GOOD MOVE IN STOCKS BUT THE RISK IS RISING $DIA $GLD $QQQ $SLV $SPY $TBT $USO $AMD

WEEKLY MARKET DIGEST: GOOD MOVE IN STOCKS BUT THE RISK IS RISING $DIA $GLD $QQQ $SLV $SPY $TBT $USO $AMD

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.

REVERSAL IN TECH, G7 MEETING

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

Reversal In Tech

Yesterday morning was a perfect example of paying attention to money flows and interpreting them correctly. At the time the Morning Capsule was written, almost all credible bundits on Wall Street were calling for tech stocks to move strongly higher.  The Arora Report was the only one with a  contrary opinion for the day.  We wrote:

Money Flows At A Contrary Signal Level

Positive money flows are good for stocks until they reach very high levels.  Money flows in popular tech stocks have reached very high levels quickly.  This is often a contrary signal.  This means there is too much risk in buying popular tech stocks right here.  Since tech stocks have been the leaders, the risk in the overall market has increased.

Please click here to see money flows in popular tech stocks.

On the positive side this market is controlled by the momo crowd and the upside momentum is increasing.  However the momo crowd is fickle.

Yesterday tech stocks fell.  The example of AMD that was published in ZYX Buy was spot on.  AMD fell about 5% and is being sold this morning.

Tech stocks continue to be sold this morning.  The weakness in tech is now spilling into the overall market in the early trade. However as a note of caution, the market is in the control of the momo crowd and the momo crowd is buying.

Momo Crowd And Smart Money In Stocks

The momo crowd continued to buy yesterday.  The momo crowd is aggressively buying in the early trade today.

The smart money sold yesterday.  The smart money is lightly selling in the early trade today.

G7 Meeting

The G7 meeting is taking place in Canada. It will be a contentious meeting as other countries are aligning against the United States on trade issues.

Gold

Gold is seeing buying as some money is flowing out of stocks into gold for safety reasons.

Oil

Oil continues its mild rally from an oversold condition.

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.

The dollar is stronger.

Interest rates and bonds are range bound.

Gold futures are at $1302, silver futures are at $16.80, and oil futures are $65.88.

S&P 500 resistance levels are 2800, 2840 and 2860; support levels are 2740, 2700 and 2688.

DJIA futures are down  74 points.

MONEY FLOWS IN TECH STOCKS AT A LEVEL THAT IS OFTEN A CONTRARY SIGNAL, CANNABIS VOTE

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

Money Flows At A Contrary Signal Level

Positive money flows are good for stocks until they reach very high levels.  Money flows in popular tech stocks have reached very high levels quickly.  This is often a contrary signal.  This means there is too much risk in buying popular tech stocks right here.  Since tech stocks have been the leaders, the risk in the overall market has increased.

Please click here to see money flows in popular tech stocks.

On the positive side this market is controlled by the momo crowd and the upside momentum is increasing.  However the momo crowd is fickle.

Momo Crowd And Smart Money In Stocks

In the early trade the momo crowd is buying stocks.  The smart money is inactive.

Cannabis Vote

The Senate in Canada will vote today to legalize cannabis.  If the bill is passed it will go to the House.  Many professionals are expecting a ‘sell the news’ reaction in cannabis stocks.  However retail traders are aggressively buying cannabis stocks.

Gold And Oil

Gold and oil are getting a slight lift from the weaker dollar.

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 the market is likely to open higher.

Interest rates are ticking up and bonds are ticking down.

Gold futures are at $1306, silver futures are at $16.91, and oil futures are $65.28.

S&P 500 resistance levels are 2800, 2840 and 2860; support levels are 2765, 2740 and 2700.

DJIA futures are up 64 points.

ECB TURNS HAWKISH, SPECULATION OF BEATING ITALY INTO SUBMISSION

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

Hawkish ECB

The European Central Bank will reportedly consider winding down QE at the policy meeting next week.  Four key officials are out making hawkish comments.

European bonds are trading lower.

Beating Italy

The tone of ECB has dramatically changed. There is speculation that this is an attempt to beat Italy into submission before the new Italian government tries to go against the rules of the European Union.

Impact On The U. S. Market

These developments in Europe can have substantial negative impact on the U. S. stock market.  However, at least for today the U. S. market is ignoring it because it is under the control of the momo crowd.  As is often the case, the momo crowd ignores everything other than the price momentum.

Momo Crowd And Smart Money In Stocks

The momo crowd is aggressively buying stocks in the early trade.  The buying is especially strong in FAANG stocks,  retail stocks and highly speculative stocks.  This was also the case yesterday.

The smart money is inactive in the early trade but was a mild buyer of tech stocks yesterday.

Gold

Trading in gold is listless in the absence of any major catalyst.

Oil

API reported a draw of 2.028 million barrels vs. consensus of a draw of 1.8 million.  However, oil slipped due to a large buildup in gasoline inventories of 3.759 million barrels.

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 positive but can quickly turn negative.

Interest rates, bonds and currencies are range bound.

Gold futures are at $1301, silver futures are at $16.63, and oil futures are $65.11.

S&P 500 resistance levels are 2765, 2800 and 2840; support levels are 2740, 2700 and 2688.

DJIA futures are up 102 points.

THE PMI DAY, MOMO CROWD INACTIVE IN STOCKS FOR A CHANGE

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

The PMI Day

Purchasing Managers’ Index (PMI) is a leading indicator.  PMI has just been reported in Eurozone, China and India.  For the most part, all numbers are in line with the consensus.  This indicates that the world economy is likely to grow as expected.

Momo Crowd And Smart Money In Stocks

For a change, the momo crowd is inactive in the early trade.  The momo crowd was an aggressive buyer yesterday.

The smart money is inactive.

Gold

Trading in gold is listless in the absence of any important news.

Oil

The momo crowd has suffered big losses in oil as oil has pulled back. The momo crowd continues to sell oil.

The 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 can easily swing in either direction.

Interest rates are ticking down and bonds are ticking up.

Currencies are range bound.

Gold futures are at $1297, silver futures are at $16.41, and oil futures are $64.57.

S&P 500 resistance levels are 2765, 2800 and 2840; support levels are 2740, 2700 and 2688.

DJIA futures are up 9 points.

WHAT TRADE WAR, NASDAQ IS BREAKING OUT

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

What Trade War, Nasdaq Is Breaking Out

One of the keys to success in investing is to not only pay attention to opinions and logic but to also pay attention to the price action.

The trade war is heating up. There are disappointments in negotiations with China. Europeans are upset. Closer to home, Canada and Mexico are indignant. Common sense logic would say that the stock market should go down, but Nasdaq is breaking out of the congestion zone. Let’s explore with a chart.

The Chart

Please click here for an annotated chart of Nasdaq 100 ETF (QQQ). Nasdaq 100 (NDX) is acting stronger than Dow Jones Industrial Average (DJIA) and S&P 500 (SPX). For this reason, the chart shown is not of the popular S&P 500 ETF (SPY) or DJIA ETF (DIA). Please note the following from the chart:

  • The chart shows the congestion zone with a rectangle. The congestion zone signified the struggle between bulls and bears with neither side winning.
  • The chart shows a breakout from the congestion zone. This indicates bulls temporarily winning the battle.
  • Overhead resistance is nearby as shown on the chart. This means that it is not prudent to aggressively buy here.
  • The chart shows that the breakout is not on high volume. This indicates that institutions are skeptical.
  • The chart shows that the RSI on the breakout is not higher than the prior high. This is a negative.

Of note is that the Russell 2000 represented by ETF (IWM) is also strong.  We have previously pointed that out and written about its significance.

As a note of caution, more bullishness does not mean aggressive buying. Buying still has to be selective and there may even be opportunities to short sell. If bad news continues on the trade war, the risk in this market will increase. For this reason investors need to be prudent about the cash levels they hold and what they buy.

The Arora Report recently decreased cash and hedges prior to the breakout shown on the chart. The trigger for more bullishness was the dovish statement from the Federal Reserve. In addition to stocks and ETFs to buy, The Arora Report provides its subscribers cash levels and hedges to hold based on a highly sophisticated proven ZYX Global Allocation Model with inputs in 10 categories. Please click here to see the 10 categories of input. The model is adaptive, i.e., it automatically changes itself with market conditions.  Please see ‘What To Do Now’ section below.

Momo Crowd And Smart Money

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

Gold And Oil

Trading in gold and oil is listless on lack of news.

Technical Patterns

Chinese shares are tracing a Flag. This is bullish.  The ETFs of interest are FXI and ASHR.

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 positive but can quickly turn negative.

Currencies, interest rates and bonds are range bound.

Gold futures are at $1301, silver futures are at $16.53, and oil futures are $65.84.

S&P 500 resistance levels are 2765, 2800 and 2840; support levels are 2700, 2688 and 2661.

DJIA futures are up 142  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 20% – 35% and short to medium-term hedges of  15% – 25% and very short term hedges of 10%.

 

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.

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