WEEKLY MARKET DIGEST: INFORMATION TECHNOLOGY NEW HIGH, OIL RALLY, PENNANT IN MARIJUANA $DIA $GLD $QQQ $SLV $SPY $TBT $USO

WEEKLY MARKET DIGEST: INFORMATION TECHNOLOGY NEW HIGH, OIL RALLY, PENNANT IN MARIJUANA $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.

CHINA DATA, BANK EARNINGS, DIS AND CVX BRING OPTIMISM; MARIJUANA IN A MAJOR INDEX

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

China Export Data

China’s March Trade Surplus came at $32.65 billion vs. $7.05 billion consensus.  There is a big gap here and we will need to look further below the surface.  Nonetheless, the stock market is excited about this data.

Bank Earnings

So far, JPM and WFC have reported good earnings. In our analysis, WFC earnings have problems but in the early trade, the market is disagreeing.

In our opinion JPM earnings are excellent.  JPM is a component of DJIA.

Bank earnings are causing optimism.

Big Oil Deal

Chevron is buy APC.  This is a major deal in the oil space.  This is creating optimism.

Disney

DIS unveiled its streaming service after the market close.  The presentation was significantly better than the consensus.  Also DIS is pricing the service at $6.99, much lower than the consensus and much lower than NFLX.  From a technical perspective, DIS is staging a strong breakout.  DIS is a component of DJIA and this is creating optimism.

Momo Crowd And Smart Money In Stocks

The momo crowd is aggressively buying stocks in the early trade.  Smart money is lightly and selectively selling into the strength.

Gold

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

Oil

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

Marijuana

Not long ago it would have been unthinkable for a marijuana stock to be in a major index.  Now CGC will replace Goldcorp (GG) in the S&P/TSX 60.  The S&P/TSX 60 is a major index of 60 companies listed on the Toronto Stock Exchange.  The change will be effective on April 18, before the market open.

Smart money aggressively sold marijuana stocks yesterday.

In the early trade the momo crowd is aggressively buying marijuana stocks.  Smart money is inactive.

Technical Patterns

Silver miners are tracing an island top. This is bearish. ETF of interest is SIL. Please note that this trade will work only if the dollar becomes stronger.

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 slightly weaker.

Gold futures are at $1294, silver futures are at $14.97, and oil futures are $64.46.

S&P 500 resistance levels are 2918, 2925 and 2950; support levels are 2860, 2840 and 2800.

DJIA futures are up 230 points.

JOBLESS CLAIMS FALL TO 1969 LEVEL, HOTTER PRODUCER PRICES, IEA WARNING

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

Jobless Claims

Initial Jobless Claims  fell to 196K vs. 215K consensus.  This is the lowest level since October 1969.

This indicates that the employment picture in the U. S. keeps on improving.   This is a leading indicator and carries a heavy weight in our models.

Producer Prices

Core Producer Price Index (PPI) came at 0.3% vs. 0.2% consensus.  The Headline PPI came at 0.6% vs. 0.3% consensus.

Once again prices are heating up at producer level.  So far companies have not passed on higher prices to consumers.   In theory, this should reduce corporate profits and in turn be negative for the stock market.  However the stock market is in the control of the momo crowd who does not care about anything other than the momentum.

It is important to remember that momentum  can quickly reverse.  Do you remember the last quarter of 2018?

Please pay attention to the ‘What To Do Now’ section below.

Momo Crowd And Smart Money In Stocks

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

Gold

Gold is under pressure because of the stronger dollar.  The momo crowd is selling gold.  Smart money is inactive.

Oil

IEA is warning that oil has moved up on supply concerns but going forward the demand may be to the downside.    There is no discernable  momo crowd or smart money activity.

Marijuana

There is no discernable  momo crowd or smart money activity.

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.

Interest rates are ticking up and bonds are ticking down.

The dollar is stronger.

Gold futures are at $1299, silver futures are at $14.96, and oil futures are $63.96.

S&P 500 resistance levels are 2918, 2925 and 2950; support levels are 2860, 2840 and 2800.

DJIA futures are up 28 points.

INFLATION COOLS, ECB EASY MONETARY POLICY, STRONG GASOLINE DEMAND, PENNANT IN MARIJUANA

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

Inflation

Core Consumer Price Index (CPI) came at 0.1% vs. 0.2% consensus.

Easy Monetary Policy

European Central Bank (ECB) is deciding to keep easy monetary policy.  Here are the highlights from Mario Draghi’s press conference:

  • Risks are to the down side.
  • Slower growth is extending.
  • Some factors that have been hampering growth are fading.
  • Estimated probability of a recession remains low.

ECB announcements are in line with our prior expectations at The Arora Report.  Overall it is neutral for the stock market.

Momo Crowd And Smart Money In Stocks

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

API data shows a crude inventory build of 4.1 million barrels vs. 2.3 million build consensus.

Of note is heavy demand for gasoline. Gasoline inventories show a draw of 7.1 million barrels vs.  a draw of 2 million barrels consensus.

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

We will do a separate post on oil.  You may recall one of our oil buy signals was given right at the low of this cycle and the position has produced significant gains.

Marijuana

There is no discernable momo crowd or smart money activity in the early trade.

Short sellers are working overtime to put downward pressure on marijuana stocks, notably NBEV.

Please see ‘Technical Patterns’ below.

Technical Patterns

Marijuana stocks are tracing a pennant. This is bearish.  ETF of interest is MJ.

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 easily swing either way.

Interest rates are ticking down and bonds are ticking up.

Dollar is weaker.

Gold futures are at $1306, silver futures are at $15.18, and oil futures are $64.32.

S&P 500 resistance levels are 2918, 2925 and 2950; support levels are 2860, 2840 and 2800.

DJIA futures are up 23 points.

INFORMATION TECHNOLOGY SECTOR HITS NEW HIGH, TRADE WAR WITH EUROPE, OIL RALLY

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

Information Technology Sector Hits New High

While the stock market has not hit a new high, the S&P 500 information technology sector hit a record.  Due to lower interest rates, investors are hungry for growth and rushing into information technology.

Moreover, top holdings in this sector are favorites of the momo crowd.

Trade War With Europe

Trump is proposing tariffs on $11 billion of goods from the European Union (EU) in retaliation for EU subsidizing Airbus.

So far the market is not rattled because the amount is small and tariffs will not be implemented immediately.

Momo Crowd And Smart Money In Stocks

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

Gold

A weaker dollar is helping gold.

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

Oil

Rising tensions with Iran and civil war in Libya are causing oil to continue to rally.

Marijuana

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

Technical Patterns

Mining stocks are tracing a hanging man. This is bearish. ETF of interest is XME.

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 turn positive.

Interest rates are ticking down and bonds are ticking up.

The dollar is weaker.

Gold futures are at $1309, silver futures are at $15.27, and oil futures are $64.22.

S&P 500 resistance levels are 2918, 2925 and 2950; support levels are 2860, 2840 and 2800.

DJIA futures are down 69 points.

GOLDEN CROSS AND EARNINGS SEASON OPPORTUNITIES AHEAD — BUT BE CAREFUL; LIBYA FIGHTING

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

Earnings Season Opportunities

Earning season is ahead. This is a good time to review your stance on the stock market. Let us explore with the help of a chart.

Please click here for the annotated chart of S&P 500 ETF (SPY). For the sake of full transparency, this is the same chart without any changes that was previously published. Investors may also want to observe similar behavior on the charts of Dow Jones Industrial Average (DJIA), Nasdaq 100 ETF (QQQ) and small-cap ETF (IWM). They all do not produce a golden cross or a death cross at the same time. Please note the following:

  • The chart shows a golden cross. A golden cross occurs when the 50 day moving average breaks above the 200 day moving average.
  • A golden cross is a bullish pattern.
  • Since the chart was published, the market has moved up as was predicted by the golden cross.
  • The chart shows the Arora buy signal given on Christmas Eve. Hindsight, the Arora buy signal was given at the exact low of the present cycle. Since the Arora buy signal, the stock market has moved up about 23%.
  • The stock market has staged a strong rally ahead of the earnings season.
  • The Arora Report was one of the first to start sharing with you that the earnings growth was slowing.
  • Earnings are the single best determinate of future stock prices.
  • The stock market has rallied in the face of slowing earnings growth because of a complete reversal in the Fed policy.
  • When interest rates go lower, as has happened here, each dollar of earnings is worth more for the stock market.
  • Progress in China trade talks has helped but in our opinion, the Fed policy has been the main driver of this rally.
  • Technical patterns of popular stocks such as (), Amazon (), Facebook () and Apple () are such that they indicate that the market is likely to go higher. However no one should exclusively rely on technical patterns as they do not always work.

The Key Question

Here is the key question for investors: Is the slowing earnings growth relative to the lower interest rates fully discounted in the stock market? There are a variety of opinions on the subject. In our analysis, it is more likely than not that the market has overshot to the upside.   For this reason as earnings come out, the market is vulnerable. Investors need to be careful.

This does not mean that investors should sell wholesale. The reason is that the market is controlled by the momo (momentum) crowd. The momentum is to the upside. The momentum can easily carry the market to new highs. Many short sellers likely have stops above the old highs. If the old high is taken out, these stops will trigger putting more upward pressure on the stock market.

In Practical Terms

At The Arora Report we provide precise levels of cash, hedges and positions to hold. We utilize ZYX Asset Allocation Model with inputs in 10 categories and not just rely on the momentum. Please click here to see the 10 categories. Momentum is great as long as it works but it can also reverse quickly. Do you remember December 2018?

Earnings season will provide many new opportunities for short term trades as well as long term investments. The key is to look for earnings surprises.

Momo Crowd And Smart Money In Stocks

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

Gold

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

Oil

Fighting in Libya is approaching the capital city of Tripoli.  Libya is an oil exporter. This is causing the bull run in oil.

The momo crowd is aggressively buying 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 negative.

Interest rates and bonds are range bound.

The dollar is weaker.

Gold futures are at $1304, silver futures are at $15.22, and oil futures are $63.35.

S&P 500 resistance levels are 2918, 2925 and 2950; support levels are 2860, 2840 and 2800.

futures are down 94  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 19% – 31% and short to medium-term hedges of  5% – 15% and short term hedges of 5%.

 

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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Check out our enviable performance in both bull and bear markets.

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