WEEKLY MARKET DIGEST: HOPES OF RATE CUTS AND TRUMP’S UNCANNY TIMING DRIVE STOCKS HIGHER BUT BE CAREFUL $DIA $GLD $QQQ $SLV $SPY $USO

WEEKLY MARKET DIGEST: HOPES OF RATE CUTS AND TRUMP'S UNCANNY TIMING DRIVE STOCKS HIGHER BUT BE CAREFUL $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.

VERY WEAK JOBS DATA BUT TRUMP AGAIN ARRESTED A POTENTIAL STOCK MARKET FALL

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

Very Weak Jobs Data

In Wednesday’s Morning Capsule, we highlighted in red,

Weak ADP

ADP employment change came at 27K vs. 170K consensus.  This marks the smallest gain since this economic expansion began.  This is potentially an early warning sign that the economy may slow.

The reason we highlighted it in red was because this was a major change in the recent trend.

This morning the official numbers from the Department of Labor were also very weak.  Non-farm Private Payrolls came a 90K vs. 170K consensus.

The sum total of the foregoing is that the economy is beginning to weaken.

Trump Saves The Market Again

DJIA futures gave up over 100 points of gain after the release of a weak number.  As the market was falling, came the news that tariffs on some Chinese goods will be delayed until June 15th.  This caused the market to rally from the lows.

Rate Cut Hopes

Stock market bulls are now pinning their hopes on a rate cut by the Fed to prop up the stock market.

In our analysis, rate cuts are now more likely.  We have been sharing with you that the potential of rate cuts was supporting the stock market.  Now that support is even greater.  However investors should not dismiss early signs of a weakening economy.  Please pay attention to ‘What To Do Now’ section below.

Momo Crowd And Smart Money In Stocks

The momo crowd is aggressively buying stocks. Smart money is lightly selling stocks into the strength.

Gold

Gold rallied on the weak data.  Gold loves lower interest rates and a lower dollar.  Both interest rates and gold fell on the weak data.  The momo crowd is aggressively buying gold.  Smart money is inactive.

Oil

The momo crowd is acting like a yo-yo in oil.  News on Chinese tariffs is good for oil but weak jobs data is bad for oil.

Smart money is inactive.

Marijuana

The momo crowd is buying marijuana stocks.  Smart money is inactive.

Technical Patterns

Consumer staples are tracing a upside breakout. This is bullish.  ETF of interest is XLP.

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.

Interest rate are ticking down and bonds are ticking up.

The dollar is weaker.

Gold futures are at $1346, silver futures are at $14.98, and oil futures are $52.84.

S&P 500 resistance levels are 2860, 2918 and 2925; support levels are 2840, 2800 and 2765.

DJIA futures are up 65 points.

OPTIMISM ON ECB RATE SIGNAL, TALKS WITH MEXICO, INDIA RATE CUT

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

ECB Rate Signal

European Central Bank (ECB) has indicated that it may maintain negative interest rates for longer.  This is creating optimism in stocks.

Talks With Mexico

Talks with Mexico are ongoing.  So far no deal.

News related to Mexico tariffs can potentially move the stock market by a large amount in either direction depending upon if a deal is reached or talks fail.

India Rate Cut

The Reserve Bank of India cut its repurchase rate by 0.25% to 5.75% in line with the consensus.

Of note is that the Reserve Bank cut FY20 growth projections in India to 7.0% from 7.2%.

Momo Crowd And Smart Money In Stocks

The momo crowd is buying stocks in the early trade.  Smart money is inactive.

Gold

The momo crowd is buying gold.  Smart money is inactive.

Oil

EIA data was bearish for oil.  The momo crowd is aggressively selling oil.  Smart money is inactive.

Marijuana

The momo crowd is buying marijuana stocks.  Smart money is inactive.

Technical Patterns

Home builders are tracing a hanging man.  This is bearish.  ETF of interest is XHB

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 swing either way based on the news.

Interest rates are ticking  down and bonds are ticking up.

The dollar is weaker.

Gold futures are at $1340, silver futures are at $14.97, and oil futures are $52.16.

S&P 500 resistance levels are 2840, 2860 and 2918; support levels are 2800, 2765 and 2740.

DJIA futures are up 28  points.

BIG HOPE RALLY BUT ADP RAINS ON THE PARADE, ALL NOT CLEAR YET

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

Hope Rally On Rate Cut Prospects

Over 500 DJIA point rally in the stock market yesterday was based on hopes of a rate cut after comments from Powell.  A careful analysis of Powell’s comments show that Powell was not very dovish, the market simply used that as an excuse.

Yesterday’s rally was a ‘hope’ rally and hope is never a good strategy.

Investors benefit when they can figure out in advance what Wall Street may think.  On May 29th, the Morning Capsule headline read:

PROSPECTS OF RATE CUTS MAY SUPPORT STOCKS,

Going into yesterday, our subscribers were already tuned into the prospects of rate cuts.

The day before yesterday, before the big rally, we gave a signal to take partial profits on inverse ETF PSQ and short position on QQQ. With the benefit of hindsight, those calls were spot on.

Weak ADP

ADP employment change came at 27K vs. 170K consensus.  This marks the smallest gain since this economic expansion began.  This is potentially an early warning sign that the economy may slow.

All Not Clear

In spite of the big rally yesterday, all is not yet clear. Ideally, another day with about 90% advancing volume will show that it is time to reduce hedges and reduce cash.

Momo Crowd And Smart Money In Stocks

The momo crowd is aggressively buying stocks in the early trade.  Smart money is inactive.

Gold

Gold is rocketing on prospects of rate cuts.  If rates are cut, it may lead to a weaker dollar.  Since gold is priced in dollars, weaker dollar means higher price on gold.  However, at this time this is only a big hope of gold bulls as the dollar is staying strong.

The momo crowd is aggressively buying gold.  Gold is approaching a major resistance around the psychological level of $1350.

Smart money is inactive.

Oil

API showed a build of 3.545 million barrels vs. 200K draw consensus.  This data is bearish for oil.

There is no material smart money or momo crowd activity in the early trade as traders wait for EIA data that will be released at 10:30 am ET.

Marijuana

CRON received a double upgrade from a major Wall Street bank citing prospects for marijuana in the United States.  This is creating positive sentiment.  On June 3rd we wrote, ahead of the move up in several marijuana stocks in the early trade this morning,

Right now marijuana stocks are oversold in the short term. When marijuana stocks are oversold, they tend to bounce. However the risk here is the momo crowd. Since the momo crowd is sitting on large losses, if the momo crowd starts selling on a rally to reduce losses, marijuana stocks can take another leg lower.

The momo crowd is aggressively buying marijuana stocks this morning.  Smart money is inactive.

Technical Patterns

Philippine stocks are tracing an island top. This is bearish.  ETF of interest is EPHE.

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 start out positive.

Interest rates are ticking down and bonds are ticking up on weak ADP data.

The dollar is slightly weaker.

Gold futures are at $1346, silver futures are at $14.96, and oil futures are $52.69.

S&P 500 resistance levels are 2840, 2860 and 2918; support levels are 2800, 2765 and 2740.

DJIA futures are up 125  points.

NEW MONTH MONEY, RISK TO BIG TECH

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

New Month Money

In the Morning Capsule yesterday when the stock futures were falling by a large amount, we wrote:

New money tends to pour into Wall Street at the beginning of the month.  This should help stocks later in the day and tomorrow even though in the early trade there is significant selling.

That call has proven spot on.  There was strong buying going into the close and after hours from the new month money. So far there is strong buying in the early trade this morning.

Risk To Big Tech

Please click here for the chart showing Arora sell signal on internet ETF FDN.  Our call was to entirely exit the position in the Lower Risk Model Portfolio and reduce the position size to 3% in the Low Risk Model Portfolio.  The chart shows this call was given right at the top and has now proven correct.

Yesterday the government indicated new antitrust investigations into big technology stocks Google (GOOG) (GOOGL), Facebook (FB) and Apple (AAPL).  There are indications of a potential investigation into Amazon (AMZN).  Many investors have oversized positions in these stocks.  Since these stocks are over owned, they present higher risk than generally understood.

Since these stocks have large weightings in indexes, the risk to indexes is larger than generally understood.

At least for the day, Wall Street is likely to push these stocks up ignoring the risks. The talk is going to be that the risk of breaking up these companies is low.

Momo Crowd And Smart Money In Stocks

The momo crowd is aggressively buying stocks in the early trade.  As we shared with you in yesterday’s Morning Capsule, smart money was lightly buying at the lows.  This morning as stocks have moved up, smart money is inactive.  In contrast, the momo crowd was selling aggressively at the lows yesterday.

Gold

The momo crowd is buying gold.  Smart money is inactive.

Oil

The momo crowd is selling oil.  Smart money is lightly buying oil.

Marijuana

The momo crowd is buying marijuana stocks.  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 positive.

Interest rates are ticking up and bonds are ticking down.

The dollar is stronger.

Gold futures are at $1327, silver futures are at $14.73, and oil futures are $52.73.

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

DJIA futures are up 197 points.

MONEY FLOWS INTO GOLD, RATE CUT, VIETNAM WINS FROM NEW TARIFFS ON MEXICO

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

New Money

New money tends to pour into Wall Street at the beginning of the month.  This should help stocks later in the day and tomorrow even though in the early trade there is significant selling.

Rate Cuts

The probability of rate cuts is increasing.  Now there is 55% probability of a rate cut in the next four months.  This should help the stock market.

Vietnam Wins

Vietnam has been a winner from the trade war with China.  Now Vietnam has another win from tariffs on Mexico.  Long term investors ought to take a close look at Vietnam.  However Vietnam is very volatile and needs to be bought correctly.  Vietnam is covered in ZYX Emerging.  ZYX Global also has a position in Vietnam at this time.

Momo Crowd And Smart Money In Stocks

The momo crowd is selling stocks.  Smart money is lightly buying stock in the early trade.

Gold

The momo crowd is aggressively buying gold.  Smart money is inactive.

Gold has blown past several micro resistance levels.  This indicates the ferocity of the buying.

The reason behind the buying is tariffs on Mexico.

The reason smart money is not buying is because gold is priced in dollars and the dollar is strong.  If the dollar gets stronger on trade war concerns, the gold rally may fail.

Oil

The momo crowd is aggressively selling oil.  Smart money is lightly buying oil.

Marijuana

There is no discernable momo crowd or smart money activity in marijuana.

Marijuana is close to becoming legal in Illinois.  This is a positive for marijuana.

Technical Patterns

Singapore stocks are tracing an exhaustion bar.  This is bullish.  ETF of choice is EWS.

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 likely to swing positive. However expect the market to start out lower.

Interest rates are ticking down bonds are ticking up.

Currencies are range bound.

Gold futures are at $1322, silver futures are at $14.74, and oil futures are $67.94.

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

DJIA futures are down 38 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 24% – 34% and short to medium-term hedges of  10% – 20% and short term hedges of 10% – 20%.

 

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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