(The Weekly Digest reproduces the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers. )
JOB NUMBER UNEXPECTEDLY DIVERGES FROM OTHER DATA, RAISE MORE CASH
September Non-farm Private Payrolls came at 118K vs. 200K consensus. This is completely unexpected based on the consensus view and other normally correlated data.
The employment number is a lagging indicator. The models at The Arora Report focus on leading indicators. However, in the short term, it is important for investors to immediately react to this number. There is a reason that this number is called the mother of all numbers. The reason is that big money changes its allocations based on this number.
Here is an analogy to understand the impact of this number.
To correctly predict which girl will win a beauty contest, you would need to figure out what is judges’ definition of beauty, your own definition of beauty does not matter.
If the next job number is similar and other economic data that has been strong starts weakening, the first rate rise will likely be March 2016.
Paradoxically, this number is likely to help emerging markets that are commodity importers such as India, Philippines, Taiwan, South Korea, and Turkey.
DJIA futures were trading over 100 points on the plus side before the release of this number. As of this writing they have plunged to -242 points, a swing of about 350 points.
Gold and silver are surging on the prospect of deferred rate increase.
Interest rates are falling.
Oil is range bound. Oil would have fallen on this number if it was not for Syria concerns going into the weekend.
Our very, very short-term early stock market indicator is negative.
What To Do Now?
All buy zones are being suspended. Due to this totally unexpected number ,the risk has considerably risen this morning. Investors may consider immediately raising more cash. The amount of cash depends upon personal preferences. As a starting guide, consider 35% to 50% cash levels in addition to any hedges.
As a full disclosure, ZYX Buy Change Alert raised the hedge by 7% this morning in the futures market as a favorable price.
Gold futures are at $1131, silver futures are at $14.97, and oil futures are $44.85.
S&P 500 resistance levels are 1920, 1962, and 2000; support levels are 1860, 1838, and 1800.
DJIA futures are down 242 points.
INVESTORS CELEBRATE CHINA PMI BUT GLENCORE IS BEGINNING TO SPOIL THE PARTY, WATCH SYRIA
China official PMI came at 49.8 vs. 49.7 consensus. Investors cheered this slight stabilization of Chinese manufacturing economy. Japan ran up 1.92% and most markets in Asia were higher. In Europe, the stock markets started rocketing but then Glencore started spoiling the party. Glencore is one of the largest, heavy debt laden, commodities firm in the world. The concern is its ability to pay back its debt in view of commodity prices. Glencore is listed in London and Hong Kong. After continuing it climb, as of this writing, Glencore has turned negative.
The day is full of economic data that may move the market. There is a lot of ISM data at 10:00 am ET.
Oil is running up as Russia starts bombing in Syria.
Gold and silver have been trying to rally on Syria but rallies are being met with selling.
Interest rates are ticking lower on Syria.
Our very, very short-term early stock market indicator is positive but can turn quickly.
What To Do Now?
All buy zones are now active. Consider lightly scaling in stocks or ETFs in the lower one-quarter (1/4) of the buy zones. This is not the time to be aggressive. Nothing should be bought in the upper three-quarters (3/4) of the buy zones.
Please note that if a stock or ETF has fallen below the lower band of the buy zone, it is no longer a buy unless there is a new post.
Consider starting to book profits on shorts, there will be specific posts.
Still continue to hold a fair amount of cash.
Caution: It is a mistake to buy on up-spikes on up days. Up days should be used for shorting. Buying should be limited to down spikes on down days.
Gold futures are at $1115, silver futures are at $14.53, and oil futures are $46.26.
S&P 500 resistance levels are 1920, 1962, and 2000; support levels are 1860, 1838, and 1800.
DJIA futures are up 45 points.
WEAK INDUSTRIAL PRODUCTION IN JAPAN TRIGGERS A GLOBAL RALLY, STRONG ADP REPORT
Overnight Industrial Production in Japan came at -0.5% vs. consensus of +1% and government projection of +2.8%.
During the recent stock market decline, money has been rushing into Japanese yen which is considered a safe haven. Weak industrial production caused yen to weaken. Weakening yen led money to leave yen and into Japanese equities. Nikkei 225 rose 2.7%.
Other positive overnight was in India where the market rose 1.35% after prior day’s rate cut.
Weak industrial production in Japan gave rise to speculation that Bank of Japan will do more easing. Easing in Japan will be positive for Europe. Stocks in Europe have taken off. As of this writing Germany is up 2.41%, France is up 2.68%, Italy is up 2.43% and U.K. is up 2.08%.
Emerging markets are also rising on the prospect of more monetary easing.
In the U. S., ADP Non-farm Private Payrolls came at 200K vs. 200K consensus. Gold and silver fell on this strong number.
API Inventor
Our very, very short-term early stock market indicator is .
What To Do Now?
All buy zones are now active. Consider lightly scaling in stocks or ETFs in the lower one-quarter (1/4) of the buy zones. This is not the time to be aggressive. Nothing should be bought in the upper three-quarters (3/4) of the buy zones.
Please note that if a stock or ETF has fallen below the lower band of the buy zone, it is no longer a buy unless there is a new post.
Consider starting to book profits on shorts, there will be specific posts.
Still continue to hold a fair amount of cash.
Gold futures are at $1117, silver futures are at $14.54, and oil futures are $44.94.
S&P 500 resistance levels are 1920, 1962, and 2000; support levels are 1860, 1838, and 1800.
DJIA futures are up 165 points.
OCTOBER OFTEN A BEAR KILLER, INDIA CUTS INTEREST RATES, PLATINUM FALLS BELOW $900
In dealing with the volatility that the markets are experiencing, it is important to keep in mind the seasonal tendencies. The following often, but not always, occurs:
- High relative strength stocks tend to bottom between the last week of September and the third week of October.
- Low relative strength stocks tend to bottom between mid-October to mid-November.
- Mid-November to March is often the strongest period for stocks.
- Gold often rises leading to Indian festival Diwali. This year Diwali occurs on November 11th.
Case-Shiller Home Price Index came at 4.96% vs. consensus of 5.15%, roughly in line but a strong number.
The Reserve Bank of India reduced its repo rate to 6.75% vs. consensus of 7%. The bigger than expected rate cut caused a turn around in Indian stock market which closed up 0.5%.
Japanese stocks fell as yen rose. Yen is considered a safety trade
Earlier platinum dipped below $900, a six and a half year low. Copper is trading right at major support of $2.25. (ZYX Short Sell Change Alert has positions in platinum, palladium, silver, gold, copper, rare earth minerals and uranium either directly or through miners.)
Interest rates are hanging near their lows as money continues to rush into Treasuries.
Our very, very short-term early stock market indicator is positive but can quickly turn.
What To Do Now?
All buy zones are now active. Consider lightly scaling in stocks or ETFs in the lower one-quarter (1/4) of the buy zones. This is not the time to be aggressive. Nothing should be bought in the upper three-quarters (3/4) of the buy zones.
Please note that if a stock or ETF has fallen below the lower band of the buy zone, it is no longer a buy unless there is a new post.
Consider starting to book profits on shorts, there will be specific posts.
Still continue to hold a fair amount of cash.
Gold futures are at $1129, silver futures are at $14.60, and oil futures are $45.13.
S&P 500 resistance levels are 1920, 1962, and 2000; support levels are 1860, 1838, and 1800.
DJIA futures are up 66 points.
UGLY CHARTS AND QUARTER-END WINDOW DRESSING FORM A TOXIC COMBINATION, WILL ECONOMIC DATA COME TO THE RESCUE?
This week the third quarter ends. Portfolio managers will do window dressing, most likely by selling stocks that have been down this quarter. Such selling may make charts look even uglier, prompting technically oriented traders to add to the selling.
The foregoing may provide an opportunity for long-term investors to slowly scale into select stocks with good long-term fundamentals.
This week is heavy with economic data from across the globe. We will be carefully watching and analyzing the economic data. If economic data is positive, it is likely to trump the technical. On the other hand, if economic data is poor, it is likely to add to the selling.
August Personal Spending came at 0.4% vs. 0.3% consensus. Since about 70% of the U. S. economy is consumer based, this data is positive.
Personal Income came at 0.3% vs. 0.4% consensus.
Gold, silver and oil are taking a hit as Smart Money sold them overnight.
Interest rates are range bound as investors continue to buy Treasuries as a safe haven.
Our very, very short-term early stock market indicator is negative but can quickly turn.
What To Do Now?
All buy zones are now active. Consider lightly scaling in stocks or ETFs in the lower one-quarter (1/4) of the buy zones. This is not the time to be aggressive. Nothing should be bought in the upper three-quarters (3/4) of the buy zones.
Please note that if a stock or ETF has fallen below the lower band of the buy zone, it is no longer a buy unless there is a new post.
Consider starting to book profits on shorts, there will be specific posts.
Still continue to hold a fair amount of cash.
Gold futures are at $1129, silver futures are at $14.59, and oil futures are $44.61.
S&P 500 resistance levels are 1962, 2000, and 2017; support levels are 1860, 1838, and 1800.
DJIA futures are down 69 points.
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