WEEKLY MARKET DIGEST: GROWTH COOLS, CUSP OF TRADE WAR, GOLD INVESTORS WATCH JAPANESE AND FRENCH BONDS $DIA $GLD $QQQ $SLV $SPY $TBF $TBT $USO

   WEEKLY MARKET DIGEST: GROWTH COOLS, CUSP OF TRADE WAR, GOLD INVESTORS WATCH JAPANESE AND FRENCH BONDS $DIA $GLD $QQQ $SLV $SPY $TBF $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.

GROWTH COOLS, GOLD UNDER PRESSURE BUT STILL IN SUPPORT ZONE, CUSP OF TRADE WAR WITH MEXICO

This is what you need to know today.

Economic Growth Cools

Q4 GDP came at 1.9% vs. 2.2% consensus.

Durable Orders Ex-trans came at 0.5% vs. 0.5% consensus.

The foregoing means that economic growth has cooled.  Although market pays a lot of attention to these numbers, these are lagging indicators.  Our algorithms are based on leading indicators.  However, we still cannot ignore these numbers because market pays attention to them.

Gold Under Pressure But Still In Support Zone

Gold has had five consecutive weeks of higher highs and higher lows.  Unless something changes today, by the end of today, this uptrend will be broken.

Cusp Of Trade War With Mexico

U. S. and Mexico are at the cusp of a trade war.  The president of Mexico has canceled his visit to Washington.  The battle is taking place in the open on Twitter.

May Visit

U. K. Prime Minister May is visiting the United States.  There is speculation that May and Trump will strike a trade deal.  However, U. K. is prohibited from negotiating a separate trade deal until it formally exits the EU.  It will be interesting to see if Trump breaks the rules.

Markets

Our very, very short-term early stock market indicator is negative.

Oil, currencies, bonds and interest rates are range bound.

Gold futures are at $1183, silver futures are at $16.72, and oil futures are $53.39.

S&P 500 resistance levels are 2300, 2334 and 2363; support levels are 2288, 2250, and 2222.

DJIA futures are down 28 points.

GLOBAL RALLY GATHERS STEAM AFTER DOW 20,000, GOLD INVESTORS WATCH FRENCH AND JAPANESE BONDS

This is what you need to know today.

Dow 20,000

After Dow closed over 20,000 for the first time the global rally is gathering steam.  Mom and pop are excited and likely to send more money to their favorite mutual funds.

Professionals watch S&P 500 where the next milestone is 2300.  As of this writing S&P 500 futures are sitting at 2293.

Gold Investors Watch French And Japanese Bonds

U. S. bond yields have been rising since Trump’s election.  Unless inflation expectations pickup, rising bond yields are negative for gold.  However gold has been supported with buying from overseas where bond yields had been lagging.  Now that is changing.  Overnight, French 10-year yield went over 1% for the first time in more than a year.   Yield on 10-year Japanese bonds reached its highest level this year in response to Bank of Japan skipping purchase of short-term bonds.

We have been sharing with you support zone for gold of $1180 to $1188.  As of this writing gold has breached the top end of the zone.  Support zone for silver has been $16.88 to $17.  As of this writing silver has breached the low end of the support zone.   We will be carefully watching how gold behaves in the support zone as that will be a good indication for the future.

Weekly Initial Jobless Claims

Weekly Initial Jobless Claims came at 259K vs. 246K consensus.  This is not good news.  This is a leading indicator and carries heavy weight in our models. To reduce noise, we use a four week moving average in our models.

At least temporarily market is oblivious to this piece of bad economic data.

Oil

The sentiment today has turned positive for oil as some investors appear to think that cuts from OPEC will outweigh expanding U. S. production.

Markets

Our very, very short-term early stock market indicator is neutral but expect the market to start out positive.

Iron ore continues its rally climbing 1.1%.

U. S. bonds and interest rates are range bound after bonds fell yesterday.

Currencies are range bound.

Gold futures are at $1189, silver futures are at $16.87, and oil futures are $53.31.

S&P 500 resistance levels are 2300, 2334 and 2363; support levels are 2288, 2250, and 2222.

DJIA futures are up 14 points.

INDICATIONS FOR MARKET TO OPEN ABOVE DOW 20K, THE REAL REASON BEHIND GLOBAL RALLY, GOLD ATTACKED AGAIN

This is what you need to know today.

Dow 20K

As of this writing, indications are that the market will open above Dow 20K.  We will be carefully watching to see how institutions behave at this level.   Often there is a ‘sell the news’ reaction.

The Real Reason Behind The Rally

The rally started yesterday in the United States on short covering and has now morphed into a full fledged global rally.  Those who do not trade but are talking heads are out in force claiming that the rally is due to better earnings.  Looking at earnings released yesterday, the talking heads are wrong based on facts.  It is simply that talking heads have to find a reason after the fact to keep their jobs.

Here is the real reason.  A wide spread consensus was reached that the rally would end on Trump inauguration.  Many new shorts were established before the inauguration.  When the market did not sell off after the inauguration, shorts panicked and started covering.  This morning, less informed momo crowd listening to the talking heads is putting in buy orders.

Gold Attacked

It appears that new shorts are being established in gold by the same crowd that got burned by shorting stocks ahead of the inauguration. The thinking is that safe haven need for gold is abating as stocks rally.  We will be carefully watching how gold behaves in the  $1180 – $1188 if it dips that low.

Oil Inventories Rise

API Inventory data showed that oil inventories rose by 2.93 million barrels vs. consensus of 1.5 million barrels.  Oil is falling on the news.  At 10:30 am ET, EIA data will be released.  This data is likely to be a market moving event.

Markets

Our very, very short-term early stock market indicator is positive.

Currencies are volatile and interest rates are ticking up.

Bonds are ticking down.

Gold futures are at $1200, silver futures are at $16.91, and oil futures are $52.81.

S&P 500 resistance levels are 2288, 2300 and 2332; support levels are 2250, 2222, and 2200.

DJIA futures are up 101  points.

PERVERSE MOVE IN CURRENCIES DRIVES STOCKS, BONDS, GOLD AND OIL; KEY BREXIT RULING

This is what you need to know today.

Currencies In The Cat Bird Seat

Currencies are now in the cat bird seat driving stocks, bonds, gold and oil.

If you want to know the direction of stocks, bonds, gold or oil at this time, keep a close on currencies.  Of course we are doing it for you.

Perverse Move

Treasury Secretary nominee Mnuchin said a strong U. S. dollar could have a negative effect on the U. S. economy.  The dollar first moved lower on the comment.

There is a lot of economic data from overseas that is also dollar negative. In a perverse move, dollar bulls took advantage of the weakness to buy the dollar aggressively.

Our insight is that the ‘smart money’ is thinking potential introduction of a trillion dollar infrastructure spending by congressional Republicans, possibly as early as today, would be positive for the dollar. The ‘smart money’ appears to be attempting to get ahead of the news.

Gold Break Out Fails But Highly Resilient

An attempt by gold to break out failed after gold touched a two month high earlier today.  The cause of the failure is aggressive buying of the dollar.

The insight here is that gold is resilient as only a shallow pullback was met with strong buying.

Aluminum

Yesterday we told you about rally in aluminum.  There are reports that China plans to reduce capacity by 3.3 million tons.  Aluminum rose by another 1.4% to $1874 per ton.

Stocks

European stocks rallied after a three day decline but U. S. stocks in early trading are not following.

Oil

Oil is slightly higher on Iraq stating that it is about done implementing its production cut.

Markets

Our very, very short-term early stock market indicator is neutral.

Interest rates are ticking higher and bonds are ticking lower.

Gold futures are at $1213, silver futures are at $17.18, and oil futures are $53.09

S&P 500 resistance levels are 2288, 2300 and 2334; support levels are 2250, 2222, and 2200.

DJIA futures are up 7 points.

NERVOUSNESS AS TRUMP GIVES PRIORITY TO TRADE, GOLD BENEFITS AND DOLLAR FALLS, OIL FALLS ON GOOD NEWS

This is what you need to know today.

Nervousness

Markets across the globe are starting out nervous as Trump gives priority to trade deals.

Trump will meet with U. K. Prime Minister May this Friday.

Trump is also setting up early meetings on NAFTA.

Gold Benefits And Dollar Falls

Nervousness in forex has increased on breach of critical 115 yen level, dollar is weak against most currencies.

Gold is benefiting from the weak dollar.  However, aggressive sellers came into the market around $1214.

Japan

Nikkei 225 fell 1.29% on stronger yen.

Europe

European stocks touched the lowest level this year.

Oil Falls On Good News

On Sunday, OPEC leaders met and declared that the cuts envisioned in the agreement have already mostly happened.  This is good news indeed for oil as the expectations have been of wide spread cheating.  Cheating simply has not materialized.  Oil first went up but then aggressive selling came in.  Selling may be prompted by an older report by  BHI that 35 new rigs started last week.

When a commodity falls on good news, it often indicates near term pullback.

Markets

Our very, very short-term early stock market indicator is neutral, expect stocks to start out slightly negative.

Interest rates are ticking down and bonds are ticking up.

Aluminum is hitting a one year high.

Gold futures are at $1211, silver futures are at $17.16, and oil futures are $52.34.

S&P 500 resistance levels are 2288, 2300 and 2334;  support levels are 2250, 2222, and 200.

DJIA futures are down  7 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 27 – 38% of assets in cash or treasury bills, and short to medium-term hedges of  25% and very short term hedges of 5%.

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