(The Weekly Digest reproduces the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers. )
GREAT NEWS ON JOBS, CHINA TIGHTENS CAPITAL CONTROLS
This is what you need to know today.
This morning there is great news on jobs from the Department of Labor. Non-farm Private Payrolls came at 275K vs. 195K consensus. In the United States, not only job creation is growing, it is accelerating.
Market in Shanghai stabilized after circuit breakers were removed. China started stricter capital controls. There are a number of reports that the authorities are verbally ordering banks to not allow retail customers to buy more than $5000 a day in exchange for yuans without a special appointment; with a special appointment up to $10,000 can be bought in a day but number of appointments is limited to three per week per person. Chinese citizens are already restricted to buying no more than $50,000 in exchange for yuans per year.
Smart Money is lightly selling gold and silver.
Oil is drifting down.
Dollar is getting stronger on the strong jobs data.
Bonds are beginning to give up flight to safety gains from yesterday.
Our very, very short-term early stock market indicator is positive.
A Reminder
As our long time subscribers know well, that during the 2008 and early 2009 market crash, when stock market lost about 50%, subscribers to The Arora Report made money by the boat load. For long only investors, this remarkable performance was achieved by using inverse ETFs.
Our models do not expect a repeat of 2008. In the most likely worst case, there may be a garden variety bear market that typically occurred every 18 to 24 months prior to the recent six-year market run.
What To Do Now?
It is important for investors to look ahead and not in the rear view mirror.
Consider only adding new positions per new posts since October 1st.
Consider continuing to hold existing positions. Based on individual risk preference, continue to hold 30-50% cash or hedges.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.
Gold futures are at $1097, silver futures are at $14.01, and oil futures are $33.41.
S&P 500 resistance levels are 2000, 2017, and 2038; support levels are 1920, 1860, and 1838.
DJIA futures are up 185 points.
Individual Trades
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CHINESE MARKET AGAIN FALLS LIMIT DOWN, BUT THERE IS GOOD NEWS ELSEWHERE
This is what you need to know today.
Chinese market fell limit down off 7% in a grand total of 29 minutes and was halted for the reset of the day.
Real Culprit
The real culprit was that China set the yuan lower than previous day’s fix. This is the eighth day in a row of lower setting.
Unlike dollar, yuan does not float freely. It is the Chinese government that sets the exchange rate.
After inclusion in IMF basket of reserve currencies, the expectation was that China would keep yuan stable. Why is Chinese government so aggressively lowering yuan? What does the Chinese government know that is not evident in publicly released economic data in China? The foregoing questions are haunting the Chinese market and other markets worldwide.
Our Answer
Back in 2011, The Arora Report gave a major sell signal on China with the title China Super Cycle Is Over. At that time a vast majority of other firms were bullish. Our call has proven spot on and made a lot of money for subscribers to ZYX Emerging.
Since our famous call, we have been consistently reminding our subscribers that economic data from China is highly suspect.
In our analysis, Chinese economy is a lot weaker than the world thinks. PBOC has already provided massive stimulus. Chinese government appears to be running out of arrows in its quiver.
China is very concerned about its prestige. Devaluing its currency every day certainly does not help China gain prestige.
In our analysis, devaluing currency is the last thing the Chinese government wants to do, but it is left with no choice in order to save the economy.
Good News Elsewhere
As our long time subscribers know, one of our leading indicators is Weekly Initial Jobless Claims. The Department of Labor just reported that jobless claims fell by 10,000 to 277,000, roughly in line with consensus. This is good news.
The latest data shows that euro zone economic sentiment improved and unemployment fell.
Economy in India is chugging along.
In spite of heavy dependence on oil, Russian economy is faring better than expectations.
Japanese economy is doing better than expectations.
Most importantly, over all the U. S. economy is doing better than expectations.
Markets
Oil continues to fall out of bed as yuan weakens.
There is heavy buying in gold and silver by the momo crowd. However, there is no buying in gold and silver by Smart Money.
Bonds are strong as money flees stocks into bonds.
Dollar is range bound but yen is strengthening.
Singapore dollar is hitting a six year low. Singapore is worth watching because it is a major trade hub for foreign companies trading in China.
Our very, very short-term early stock market indicator is negative.
A Reminder
As our long time subscribers know well, that during the 2008 and early 2009 market crash, when stock market lost about 50%, subscribers to The Arora Report made money by the boat load. For long only investors, this remarkable performance was achieved by using inverse ETFs.
Our models do not expect a repeat of 2008. In the most likely worst case, there may be a garden variety bear market that typically occurred every 18 to 24 months prior to the recent six-year market run.
What To Do Now?
It is important for investors to look ahead and not in the rear view mirror.
Consider only adding new positions per new posts since October 1st.
Consider continuing to hold existing positions. Based on individual risk preference, continue to hold 30-50% cash or hedges.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.
Gold futures are at $1103, silver futures are at $14.03, and oil futures are $32.77.
S&P 500 resistance levels are 1962, 2000, and 2017; support levels are 1920, 1850, and 1838.
DJIA futures are down 375 points.
Individual Trades
Please click on Home on the left side of the Menu. Scroll down on the Home Page for individual trades.
Click on the Search by Symbol/Tag on the right hand side and click on the symbols of interest.
STOCKS SET TO FALL ON NORTH KOREAN HYDROGEN BOMB, BRENT OIL HITS 2004 LOW
This is what you need to know today.
Stocks are set to fall at the open on the claim by North Korea that it has successfully tested a hydrogen bomb. If true, this is a big deal.
Previously North Korea has tested only atomic bombs.
Atomic bombs produce a blast in kilo (thousands) of tons equivalent of TNT. Hydrogen bombs produce a blast in mega (millions) of tons.
Other than North Korea, to date, only six countries have tested and deployed hydrogen bombs. These countries are U. S., Russia, U. K., France, China and India.
North Korea has been testing advanced missile technology. Hydrogen bombs can be easily miniaturized as warheads. In contrast, to miniaturize a large atomic bomb is technologically difficult. The reason is that atomic bombs are produced by breaking atoms of a heavy element such as plutonium. A hydrogen bomb is produced by fusing together isotopes of a light element such as hydrogen.
South Korea is casting doubt on North Korea’s claim and does not believe that North Korea has the technology to produce a hydrogen bomb. It may take weeks to ascertain exactly what North Korea did. What is certain is that North Korea produced a 5.1 earthquake. Seismic signatures of a man-made quake are different from that of a natural quake.
The foregoing may destabilize the world with serious implications for financial markets.
Gold, silver, bonds and yen are rallying on safe haven demand.
Oil is falling on an American company PXD increasing its capex more than the consensus. This is indicating that at least one American producer is not retrenching but expanding in the face of a supply glut.
Brent oil hits 2004 low.
Our very, very short-term early stock market indicator is negative.
A Reminder
As our long time subscribers know well, that during the 2008 and early 2009 market crash, when stock market lost about 50%, subscribers to The Arora Report made money by the boat load. For long only investors, this remarkable performance was achieved by using inverse ETFs.
Our models do not expect a repeat of 2008. In the most likely worst case, there may be a garden variety bear market that typically occurred every 18 to 24 months prior to the recent six-year market run.
What To Do Now?
It is important for investors to look ahead and not in the rear view mirror.
Consider only adding new positions per new posts since October 1st.
Consider continuing to hold existing positions. Based on individual risk preference, continue to hold 30-50% cash or hedges.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.
Gold futures are at $1084, silver futures are at $13.91, and oil futures are $34.79.
S&P 500 resistance levels are 2000, 2017, and 2038; support levels are 1962, 1920, and 1860.
DJIA futures are down 275 points.
Individual Trades
Please click on Home on the left side of the Menu. Scroll down on the Home Page for individual trades.
Click on the Search by Symbol/Tag on the right hand side and click on the symbols of interest.
CHINESE GOVERNMENT INTERVENES IN THE MARKET, DOLLAR SURGES
This is what you need to know today.
Overnight Chinese government struggled to maintain stability in the market. The government pumped in $20 billion.
Dollar is surging this morning. Normally such a surge in the dollar causes a decline in gold and silver. At the time of this writing, the momo crowd is still buying gold. Buying gold at the time of instability makes sense but not for U. S. dollar based investors at this time.
Oil was not able to hold gains yesterday. We had shared our analysis with you in yesterday’s morning capsule regarding the surge in oil. That analysis has proven spot on.
Bonds and interest rates are range bound.
The Fed officials continue to indicate determination to raise interest rates several times in 2016. However, market participants are looking at weakness in China and are beginning to anticipate a maximum of one rate increase.
Our very, very short-term early stock market indicator is neutral.
A Reminder
As our long time subscribers know well, that during the 2008 and early 2009 market crash, when stock market lost about 50%, subscribers to The Arora Report made money by the boat load. For long only investors, this remarkable performance was achieved by using inverse ETFs.
Our models do not expect a repeat of 2008. In the most likely worst case, there may be a garden variety bear market that typically occurred every 18 to 24 months prior to the recent six-year market run.
What To Do Now?
It is important for investors to look ahead and not in the rear view mirror.
Consider only adding new positions per new posts since October 1st.
Consider continuing to hold existing positions. Based on individual risk preference, continue to hold 30-50% cash or hedges.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.
Gold futures are at $1076, silver futures are at $13.97, and oil futures are $36.84.
S&P 500 resistance levels are 2017, 2038, and 2063; support levels are 1962, 1920, and 1860.
DJIA futures are down 2 points.
Individual Trades
Please click on Home on the left side of the Menu. Scroll down on the Home Page for individual trades.
Click on the Search by Symbol/Tag on the right hand side and click on the symbols of interest.
MAJOR OPPORTUNITIES AHEAD AS CHINA PLUNGES LIMIT DOWN AND SAUDIS CUT TIES WITH IRAN
This is what you need to know today.
We have been recommending holding 30 to 50% cash. Two events overnight demonstrate the wisdom of this call. The events below are likely to provide opportunities to deploy the cash at attractive prices over the next few months.
China Manufacturing PMI came worse than the consensus. Shanghai plunged limit down about 7%. Limit down means the maximum a market is allowed to fall before it is halted for the rest of the day.
Saudis executed a prominent Shia cleric. Saudis are ruled by Sunnis.
Iran is the major Shia power. Protestors in Tehran burned the Saudi embassy. Saudis responded by cutting off ties with Iran.
Oil is screaming higher on the foregoing news. Doomsayers are predicting an all our war in the middle east.
In our analysis, doomsayers are likely wrong. This is not good news for oil but bad news. The reason is that Saudis and Iranians are the OPEC leaders. This incident will make OPEC even less impotent and increase Saudi determination to keep on pumping at the maximum pace to hurt Russia. Russia is the major ally of Iran.
Copper is falling out of bed on China concerns.
Gold, silver, bonds, yen and dollar are moving higher because of the instability in the world.
Our very, very short-term early stock market indicator is negative.
What To Do Now?
It is important for investors to look ahead and not in the rear view mirror.
Consider only adding new positions per new posts since October 1st.
Consider continuing to hold existing positions. Based on individual risk preference, continue to hold 30-50% cash or hedges.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.
Gold futures are at $1082, silver futures are at $14.61, and oil futures are $41.49.
S&P 500 resistance levels are 2017, 2038, and 2063; support levels are 1962, 1920, and 1860.
DJIA futures are down 325 points.
Individual Trades
Please click on Home on the left side of the Menu. Scroll down on the Home Page for individual trades.
Click on the Search by Symbol/Tag on the right hand side and click on the symbols of interest.
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