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.
WAGES ACCELERATE, OIL BELOW $45 AND MORE STATES BECOME BATTLE GROUND STATES
This is what you need to know today.
Jobs Report
Nonfarm Private Payrolls came at 142K vs. 170K consensus
Hourly Earnings came at 0.4% vs. 0.3% consensus. The insight here is that looking at this data and the data from prior months, wages are accelerating.
Of note is prior month’s number was revised higher to 191K from 151K reported last month.
The insight here is that higher revision of the prior month has blunted market reaction to the weaker number this month.
Oil
Oil has decisively broken support at $45. Historically, just about at this point when oil prices are falling, OPEC or Russia tries to talk oil up. Let us see if that happens this time.
Gold
Gold fell below $1300 on jobs report but institutional buying quickly pushed it over $1300. Please note that institutional buying does not equal smart money buying. Many institutions are like sheep and not smart at all. Momo crowd also continues to be aggressive buyers. Smart money is inactive.
More Battle Ground States
Polls show that more states are becoming battle ground states. This is opening up new Electoral College paths for Trump to win, main stream media for the most part is ignoring Trump’s new found strength in some of these new battle ground states.
Markets
Our very, very short-term early stock market indicator is neutral.
Bonds are grinding down and interest rates are ticking up.
Dollar is stabilizing after falling on Trump gains.
Gold futures are at $1302, silver futures are at $18.35, oil futures are $44.40.
S&P 500 resistance levels are 2100, 2120 and 2132; support levels are 2063, 2038, and 2017.
DJIA futures are up 15 points.
HAWKISH FED, OIL INVENTORY RISES THE MOST ON RECORD
This is what you need to know today.
Fed
The Fed statement after FOMC meeting was more hawkish than the consensus. The probability of interest rate hike in December has now risen to 78%.
Trump
Trump is showing more gains in several swing states.
Oil
Oil inventories rose by the most ever to a record in 34 years of record keeping.
Oil fell but has held the support at $45.
Jobless Data
Jobless Claims came at 265K vs. 256K consensus. In our models we look at a 3 month moving average which continues to show strong employment picture.
British Pound
British pound is rocketing after a court ruling that the government must get approval of the Parliament to trigger Article 50. Article 50 starts the process of exit. The thinking is the Parliament might not approve Brexit.
Markets
Our very, very short-term early stock market indicator is neutral.
Gold rally failed over $1300 and gold has pulled back.
Interest rates, bonds and currencies are range bound.
Gold futures are at $1292, silver futures are at $18.15, and oil futures are $45.67.
S&P 500 resistance levels are 2100, 2120 and 2132; support levels are 2063, 2038, and 2017.
DJIA futures are up 44 points.
INSTITUTIONS SELL STOCKS AND MOVE TO SAFE HAVENS ON TRUMP AND FED JITTERS
This is what you need to know today.
Trump Jitters
Wall Street’s awarding of presidency to Clinton is proving to be premature. Trump is closing the gap. In one poll Trump is even leading Clinton.
Fed Jitters
Fed will announce its policies at 2:00 pm ET. Nothing much is expected. For some reason, it dawned on Wall Street yesterday that there is a ‘just in case’ scenario of Fed raising rates and/or making a hawkish statement.
Institutional Actions
On Fed and Trump jitters, institutions have aggressively sold stocks and aggressively bought gold, yen and Swiss franc.
Gold
Earlier today on institutional buying gold ran over $1300 and is now pulling back.
Oil
Oil has broken support at $46. Brent is now in contango meaning that it is cheaper to buy oil for delivery now than in the future. If this continues, hedge funds may start buying oil and storing it on ships and hedging by buying futures.
Markets
Our very, very short-term early stock market indicator is neutral.
Interest rates and bonds are range bound.
British pound, euro, and yen are stronger.
Gold futures are at $1298, silver futures are at $18.59, and oil futures are $45.96.
S&P 500 resistance levels are 2120, 2132 and 2150; support levels are 2063, 2038, and 2017.
DJIA futures are down 27 points.
BOJ STANDS PUT, COMMODITIES RIP ON CHINA DATA, GASOLINE ROCKETS UP
This is what you need to know today.
Band Of Japan
BOJ stands put but admits that the inflation target will not be reached during Kuroda’s term.
Commodities
Official manufacturing purchasing managers index in China came at 51.2 vs. 50.5 consensus. Industrial commodities are ripping on the news.
Gold
Yesterday gold held support at $1272. This encouraged professional traders to push gold to over $1280 to hunt the stops. It was obvious that many retail traders’ stops were above $1280. These stops were taken out and now the momo crowd is jumping on board with more buying. Smart money is absent.
Gasoline
Gasoline is up about 15% on an explosion at Colonial Pipeline .
Natural Gas
Short covering is over. Natural gas has fallen through $3 support.
Markets
Our very, very short-term early stock market indicator is neutral.
Interest rates, yen and bonds are range bound.
Aussie dollar is strong.
Oil is attempting a weak rally.
Gold futures are at $1287, silver futures are at $18.28, and oil futures are $47.17.
S&P 500 resistance levels are 2132, 2150 and 2165; support levels are 2120, 2100, and 2063.
DJIA futures are up 29 points.
OPEC IMPASSE, CENTRAL BANK WEEK AND CLINTON EMAIL OVERHANG
This is what you need to know today.
OPEC
OPEC reached an impasse at its technical meeting in Vienna. Oil has fallen and is now testing support at $48.
Russia
Russia is one of the biggest oil producers. OPEC impasse is weakening the Russian ruble as of this writing.
Central Bank Week
This week FOMC, BOJ, and BOE meet. Nothing of significance is expected but it is important to keep a close watch.
Economic Data
Core PCE Price Index came at 0.1% vs. 0.1% consensus. This is a gage of inflation and the Fed closely monitors this number.
Personal Income came at 0.3% vs. 0.4% consensus.
Personal Spending came at 0.5% vs. 0.5% consensus.
Email Saga
Since the news broke Friday of the discovery of new Clinton emails, there has been a lot of innuendo but no specific new material information. Temporarily this is an overhang over the market.
Gold
With Diwali in the rear view mirror, physical demand for gold should ebb. Momo crowd continue to aggressively buy gold this morning, not clear what their logic is other than the general belief that gold is going up.
Markets
Our very, very short-term early stock market indicator is neutral.
Interest rates, bonds, and currencies are mostly range bound.
Gold futures are at $1273, silver futures are at $17.84, and oil futures are $48.03.
S&P 500 resistance levels are 2132, 2150 and 2165; support levels are 2120, 2100, and 2063.
DJIA futures are up 6 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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