WEEKLY MARKET DIGEST: GOOD OUTLOOK FROM BEIGE BOOK UNNERVES THE MOMO CROWD ON STOCKS $DIA $GLD $QQQ $SLV $SPY $TBT $USO

WEEKLY MARKET DIGEST: GOOD OUTLOOK FROM BEIGE BOOK UNNERVES THE MOMO CROWD ON STOCKS $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.

TRUMP UNEXPECTEDLY SLAMS OIL — GOOD FOR U. S. STOCK MARKET

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

Trump Slams Oil

Oil was rallying in the early trade. Then Trump’s tweet got publicized. Trump said that oil prices have been kept ‘artificially very high’ by OPEC.

This tweet was totally unexpected.

Trump Tweet Good For The Market

In the short term, oil going higher helps the stock market. The reason is that the market contains oil stocks and they go up when oil goes higher.  However in the long term, it causes inflation.  Inflation above about 2% is bad for the stock market.

Momo Crowd And Smart Money

Neither the momo crowd nor smart money is active this morning.

Gold

Trading in gold is listless due to absence of any strong catalyst.

Indian Rupee

The minutes from Reserve Bank of India showed unexpected hawkish tone.  This should have cause the Indian rupee to strengthen. Instead the Indian rupee is weakening. When a market behaves in an unexpected manner, it deserves close attention in the coming days.

Technical Patterns

Semiconductors are tracing a Diamond Top. This is bearish. ETF of interest is SMH.

Oil stocks are tracing an Inside Bar. This is bearish. ETFs of interest are XLE, XOP and OIH.

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 remember it is a Friday.  Which ever way the market starts moving, the move will be exaggerated.  On the upside, there is potential for a short squeeze.

Interest rates are ticking up and bonds are ticking down.

Dollar is strengthening.

Gold futures are at $1344, silver futures are at $17.19, and oil futures are $67.95.

S&P 500 resistance levels are 2700, 2740 and 2765; support levels are 2688, 2661, and 2631.

DJIA futures are down 15  points.

GOOD OUTLOOK FROM BEIGE BOOK UNNERVES THE MOMO CROWD, METALS RALLY

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

Beige Book

The Federal Reserve has released the Beige Book. The Beige Book shows solid economic outlook for the U. S.

Interest rates are rising after the Beige Book and bonds are falling.  This is unnerving the momo crowd.

Smart Money And Momo Crowd

Just like yesterday early morning, smart money lightly sold into the rally late yesterday afternoon and in the early morning today. As a result stocks are pulling back. Interestingly, the smart money has stopped selling as stocks pull back.

The momo crowd is lightly selling.

Metals Rise

Aluminum and nickel continue to rise on speculation that the U. S. may impose more sanctions. We have previously written about U. S. sanctions crippling a large Russian aluminum producer.

Gold

The momo crowd is aggressively buying gold.  A set up for a short squeeze is in place.  If the dollar weakens and/or interest rates start falling (they are rising as of this writing) a short squeeze is more likely to occur.  The first strong resistance is in the zone of $1360 to $1370.  If that resistance is broken, expect gold to shoot towards $1400.

If a short squeeze does not occur and/or dollar strengthens, expect gold to fall towards $1300.

Oil

A short squeeze has driven oil over $69.  The  short squeeze is showing the first signs of ending soon.

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 but can quickly reverse.

Gold futures are at $1351, silver futures are at $17.31, and oil futures are $69.34.

S&P 500 resistance levels are 2740, 2765 and 2800; support levels are 2688, 2661, and 2631.

DJIA futures are down 102 points.

THE MESSAGE FROM THE FEAR INDEX, BULLISH OIL DATA

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

The Message From The Fear Index

(The Arora Report subscribers include average investors, investment advisors, brokers, money managers, hedge funds and highly sophisticated institutions. This section is written for an average investor. Those with more sophistication will also benefit from the message but will recognize that the complexities are left out.)

Please click here for an annotated chart of volatility ETF (VXX). VXX ETF has a tracking error compared to the volatility index (VIX). This writing is deliberately kept very simple leaving out all the intricacies of volatility.  VXX is an easy to follow ETF for an average investor and that is the reason for using it here. Please note the following from the chart:

  • VXX goes up when the market goes down and vice versa.
  • Moves in VXX are significantly exaggerated compared to the moves of the stock market. An average investor may want to compare moves in VXX with popular ETFs such as S&P 500 (SPY), Nasdaq 100 ETF (QQQ), small cap ETF (IWM) and Dow Jones Industrial Average (DJIA). There are separate volatility products for these indexes but here we are keeping things simple.
  • The chart shows that during the ‘go-go’ days when the market went straight up, the volatility was low.
  • There was a big initial spike in volatility that was accompanied by heavy volume.
  • As shown on the chart, subsequent rises in volatility did not reach the high level reached initially.
  • Subsequent volatility spikes have been accompanied by lower volume.
  • The volatility is oversold according to RSI shown on the chart.
  • The chart shows that volatility is now near the bottom of the recent range.
  • The pattern is a topping pattern.

The message from the foregoing is that the extreme volatility recently seen, market up several hundred DJIA points or down several hundred DJIA points, may be temporarily close to subsiding. For practical purposes, dips in the market may become short term buying opportunities unless something fundamental or in the macro picture changes.

Based on the large number of emails we receive at The Arora Report, an average investor’s portfolio is concentrated in popular tech stocks such as Facebook (FB), Amazon (AMZN), Apple (AAPL), Netflix (NFLX), Google (GOOG) (GOOGL) and Micron (MU). When volatility of these stocks as a group is analyzed, the conclusion is similar to the message shared above.

VXX shows significant tracking error compared to its underlying index. For this reason, consider not using long term charts of VXX but limiting it to short term only.

Smart Money And Momo Crowd

The momo crowd is aggressively buying in the early trade.  The smart money lightly started selling when S&P 500 futures reached 2717. After about a half-hour of light selling starting around 7:15 am ET, the light selling by the smart money has subsided.

Gold

Gold is undergoing a short squeeze and  has broken above the psychological level of $1350.  There is a big resistance zone ahead $1360 to $1370.

Oil

Oil is rallying on a bullish API report.  API reported a draw of 1.047 million barrels vs. consensus of a build.

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.  The market is overbought in the short term and the indicator can easily swing negative or positive from here.

Interest rates are ticking up and bonds are ticking down.

Currencies are mixed.

Gold futures are at $1356, silver futures are at $17.10, and oil futures are $67.72.

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

DJIA futures are up 68  points.

SENTIMENT POSITIVE ON EARNINGS, GOOD HOUSING STARTS

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

Sentiment Positive On Earnings

So far earnings have been better than consensus and in line with whisper numbers.  This is turning sentiment positive.

Momo Crowd And Smart Money

The momo crowd is aggressively buying in the early trade.

The smart money is inactive.

Good Housing Starts

Housing starts came at 1319K vs. 1268K consensus.

Building permits came at 1354K vs. 1315K consensus.  This indicates that the housing market is staying strong in the United States.

Gold

Several attempts at a short squeeze yesterday failed.  The failure is causing the momo crowd to sell gold.

The smart money is inactive.

Oil

The momo crowd continues to buy oil but smart money is selling oil.

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 reverse on news or rumors.

Interest rates, bonds and currencies are range bound.

Gold futures are at $1345, silver futures are at $16.64, and oil futures are $66.24.

S&P 500 resistance levels are 2700, 2740 and 2765; support levels are 2688, 2661, and 2631.

DJIA futures are up 204 points.

MONEY FLOWING INTO STOCKS AFTER STRIKES ON SYRIA, GOOD RETAIL SALES

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

Money Flowing Into Stocks After Strikes On Syria

Over the weekend, the U. S. along with the U. K. and France hit Syria with missiles.  Last week in the Morning Capsule we wrote,

Historically after the missiles are fired, money starts flowing back into stocks and out of gold.  This is the likely scenario this time. In plain English, no need to panic.

The call from last week is now being proven spot on.  In early trade money is flowing into stocks and out of gold and oil.

Smart Money And Momo Crowd

The momo crowd is buying aggressively in the early trade.

Smart money is inactive.

Gold

Money is flowing out of gold but gold continues to levitate due to a weaker dollar.  If gold does not fall here, there is a set up for a short squeeze that can drive gold higher.

Retail Sales

The U. S. economy is 70% consumer.  For this reason our models pay a lot of attention to retail sales.

Retails Sales Ex-auto came at 0.2% vs. 0.2% consensus.

Oil

Money is flowing out of oil as Syria concerns ease.

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 reverse based on news and rumors.

Interest rates are ticking up and bonds are ticking down.

Gold futures are at $1350, silver futures are at $16.74, and oil futures are $66.80.

S&P 500 resistance levels are 2688 2700 and 2740; support levels are 2661, 2631, and 2615.

DJIA futures are up 179 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 22% – 37% and short to medium-term hedges of  15% – 25% and very short term hedges of 16%.

 

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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