WEEKLY MARKET DIGEST: IMPLICATIONS OF N. KOREA FOR STOCKS, GOLD, BONDS AND CURRENCIES; LOWER OIL DEMAND $DIA $GLD $QQQ $SLV $SPY $TBF $TBT $USO

WEEKLY MARKET DIGEST: IMPLICATIONS OF N. KOREA FOR STOCKS, GOLD, BONDS AND CURRENCIES; LOWER OIL DEMAND $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.

LOW LIQUIDITY, TAMER CPI, TOUGHER TALK, HIGHER GOLD, LOWER OIL DEMAND

This is what you need to know today.

Low Liquidity

Liquidity in the markets today is likely to be especially low.  Low liquidity allows machines and day traders to easily push the market in either direction.

Tamer CPI

Core Consumer Price Index (CPI) came at 0.1% vs. 0.2% consensus.   This shows inflation is tame.

Tougher Talk

President Trump says that his talk on North Korea was not tough enough.  This is sending shivers through Asian markets.

The U. S. momo crowd does not care.  The momo crowd is aggressively buying in the pre-market.

Higher Gold

Significant buying in gold in Asia continues.  Gold approached $1300 on release of tamer CPI data but quickly gave back the gains as the stock market started rallying.

Lower Oil Demand

IEA says that demand in India and China will be lower.  Oil is being sold aggressively on the report.

Technical Patterns

Several healthcare and biotech stocks are tracing a Double Top.  This is bearish.  ETF of interest is .

South Korean shares are tracing a Megaphone Top.  This is bearish.  ETF of interest is .

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 momo crowd is attempting to push the momo crowd higher.

Gold futures are at $1267, silver futures are at $16.92, and oil futures are $48.43.

S&P 500 resistance levels are 2450 and 2500; support levels are 2425 2400, and 2363.

DJIA futures are up 17  points.

N. KOREA PLANS TO FIRE A MISSILE TOWARDS GUAM, ASIAN BUYING IN GOLD, ASIAN SHARES FALL BUT U. S. MOMO CROWD OBLIVIOUS

This is what you need to know today.

Missiles Towards Guam

There are reports that North Korea plans to fire four missiles towards Guam.  The largest American Air Force base is in Guam.  It appears that North Korea does not intend to fire on the Air Force base but plans to send missiles 30 miles off shore as a warning to the United States.

Concern In Asia

There is significant concern in Asia regarding the North Korean situation.  Asian investors have been stunned by Trump’s remarks that we quoted in yesterday’s Morning Capsule.

Even though the world has become global, there is significantly more concern among Asian investors compared to the U. S. investors.  Stocks in Asia are selling off.

U. S. Momo Crowd Oblivious

U. S. momo crowd is oblivious and continues to buy U. S. stocks aggressively.

Smart Money Lightly Selling U. S. Stocks

The ‘smart money’ is lightly selling U. S. stocks but also continuous to buy special situations.

Asian Buying In Gold

There is significant buying coming into gold from Asia.

Buying in silver is especially strong.

New Inflation Data

Core Producer Price Index (PPI) came at -0.1% vs. +0.2% consensus.  Core PPI is a leading indicator and thus carries a heavy weight in our timing models.  Producer prices tend to increase before consumer prices.  We exclude food and energy because they create too much noise in the data.

Oil

Oil crosses $50.

Technical Patterns

Japanese stocks are tracing an Island Top.  This is bearish.  ETF of interest is .

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.

Interest rates, bonds and currencies are range bound.

Gold futures are at $1286, silver futures are at $17.17, and oil futures are $50.20.

S&P 500 resistance level is 2500; support levels are 2450, 2425, and 2400.

DJIA futures are down 58  points.

‘FIRE FURY’ MAY CREATE MANY OPPORTUNITIES, GOLD JUMPS ON NORTH KOREA

This is what you need to know today.

Fire Fury

President Trump warned North Korea with strong words, “fire fury, and, frankly, power the likes of which this world has never seen.”

Even after Trump’s statement, momo crowd continued to buy stocks aggressively for several minutes. Then the ‘smart money’ came in with light selling.

Gold Jumps

Gold is jumping on escalation of the North Korean situation.  The smart money lightly bought gold immediately after the news of North Korea miniaturizing a nuclear warhead broke.

Portfolios Correctly Positioned

As you know we are proactive.  Market is just waking up to North Korea.  However, we have been anticipating this situation and had taken this into account in our portfolios prior to this occurring.

Opportunities

North Korea is likely to provide several  good opportunities over the coming months both from the long and short side.  Most lucrative opportunities are likely to be in Asia.

The probability is very high that if there is a significant dip in the stock market, it is likely to be a buying opportunity. 

Please review your portfolio to see if it is in accordance with the ‘What To Do Now Section’ below.

South Africa

President Zuma survived no-confidence vote in the Parliament.

Technical Patterns

Gold traced an Outside Bar.  This is bullish.  ETF of choice is .

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.

Bonds are strengthening and interest rates are weakening in a safe haven move.

Funds are flowing into Japanese yen in a safe haven move.

Gold futures are at $1278, silver futures are at $16.75, and oil futures are $49.59.

S&P 500 resistance level is 2500; support levels are 2450, 2425, and 2400.

DJIA futures are down 46 points.

DOLLAR FALLS AND GOLD JUMPS ON COMMENTS, LACKLUSTER STOCKS

This is what you need to know today.

Dollar Falls And Gold Jumps

The dollar is falling and gold is jumping on dovish comments by two Federal Reserve officials. They are saying that low inflation is a problem.

Lackluster Stocks

Trading in stocks is lackluster. This is typical of August when many key players start going on vacations.

South Africa

Law makers in South Africa will decide the fate of President Jacob Zuma.  The South African currency is gaining.

We are likely to upgrade South Africa in ZYX Emerging if Zuma is voted out of power.

Potentially there is a significant opportunity ahead in South Africa for investors if reforms can be carried out.

Technical Patterns

Gold traced a Hammer.  This is bullish.  ETF of interest is .

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.

Interest rates and bonds are range bound.

Gold futures are at $1269, silver futures are at $16.38, and oil futures are $49.39.

S&P 500 resistance level is 2500; support levels are 2450, 2425, and 2400.

DJIA futures are down 17  points.

MARKET IGNORES WEAK GERMAN INDUSTRIAL OUTPUT, GOLD DOES NOT LIKE KOREA SANCTIONS, OPEC MEETS

This is what you need to know today.

German Industrial Production

German industrial production unexpectedly declined for the first time this year. It came at -1.1% vs. consensus of +0.2%.

Market Ignores German Data

A big part of the stock rally is based on the story of synchronized global growth. For this reason when a power house like Germany  unexpectedly reports a  decline in industrial production, investors ought to take a note.  For the time being, the U. S. stock market is ignoring this data.

North Korea Sanctions

United States just pulled off a rare victory at the United Nations.  The Security Counsel unanimously approved sanctions against North Korea.  Often Russia and China has been opposed to such sanctions in the past.

Stocks Celebrate But Gold Does Not Like Korea Sanctions

Sanctions remove the possibility of some kind of U. S. attack on North Korea in the near future.   The stock market is celebrating the sanctions but gold does not like them.  The sanctions are likely to reduce safe haven demand for gold.

OPEC Meets

OPEC and Russia are meeting in Abu Dhabi.  Oil is volatile in a tight range.   The news is that compliance with OPEC production quotas fell to 86% in July.  This is the lowest level since January.

Expect oil to move based on the news that comes out of the meeting.

Technical Patterns

Several oil exploration stocks have traced an Inside Bar.  This is bullish.  ETFs of interest are , , and .  Please consider not trading just based on this pattern as what happens next depends on the news from OPEC.

Long bonds traced an Island Top. This is bearish. ETFs of interest are , , and .

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.

Iron ore prices are rising.

Interest rates are ticking up and bonds are ticking down.

Euro is stronger in spite of weak German data.

Gold futures are at $1262, silver futures are at $16.15, and oil futures are $49.05.

S&P 500 resistance level is 2500; support levels are 2450, 2425, and 2400.

DJIA futures are up 29 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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