WEEKLY MARKET DIGEST: JOBS REPORT BETTER UNDER THE SURFACE, GOLD RIFFS AND OIL RIPS, POUND FLASH CRASH $DIA $GLD $QQQ $SLV $SPY $TBF $TBT $USO

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  WEEKLY MARKET DIGEST: JOBS REPORT BETTER UNDER THE SURFACE, GOLD RIFFS AND OIL RIPS, POUND FLASH CRASH $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.

WEAK HEADLINE BUT DECENT JOBS REPORT BELOW THE SURFACE, FLASH CRASH IN POUND, HURRICANE WEAKENS AND DEBATE AHEAD

This is what you need to know today.

Jobs Report

Jobs Report headline is weak as Non-Farm Payrolls came at 156K vs. 176K consensus and unemployment rate moved up to 5% from 4.9% consensus.

In our models, we use Non-Farm Private Payrolls (excluding government), this number came at 167K vs. 170K consensus.

Also of note is that participation rate went up to 62.9%.  This means more Americans who were not previously working  rushed to the workforce.

Pound Flash Crash

In early Asian trading, British pound crashed 6% in about 2 minutes. This is an extraordinary move for a currency.  In currencies even a 1% move is considered a very large move.  Pound has subsequently recovered but is still trading down about 3%. Even though lately markets have brushed off Brexit, the currency is showing that in some circles the hard realities of Brexit are beginning to set in.

Overnight currency traders have been battered.  Fortunately for our subscribers, ZYX Short has a short position in pound and is benefiting from the flash crash.

Hurricane

Hurricane Matthew has so far caused less damage in Florida than anticipated.  However it is still too early to put up many trades with the exception of one provided earlier in ZYX Buy for aggressive investors.  We are likely to provide another trade in ZYX Short.

Debate

The second presidential debate is on Sunday.  The markets have already awarded the presidency to Clinton. If Trump does well, there may be a down move in stocks on Monday.

Gold

The momo crowd is aggressively buying gold and silver on weak headline number.

Markets

Our very, very short-term early stock market indicator is neutral but expect volatility as those trading on the headline jobs number buy but more knowledgeable participants sell.

There is mixed reaction in interest rates, bonds and currencies to the jobs report.

Oil and natural gas are near highs on continued hurricane fears.

Gold futures are at $1265, silver futures are at $17.63, and oil futures are $50.52.

S&P 500 resistance levels are 2165, 2200 and 2222; support levels are 2132, 2120, and 2100.

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DJIA futures are up 9 points.

POSITION SQUARING, JOBLESS CLAIMS, OIL OVER $50, NATURAL GAS SPIKES ON HURRICANE FEARS

This is what you need to know today.

Position Squaring

Expect position squaring ahead of all important jobs report tomorrow.

Jobless Claims

Initial Jobless Claims came at 249K vs. 258K consensus. The lower the number, the better is the employment picture.  This is a leading indicator and carries heavy weight in our models.

Oil Over $50

Oil has crossed over $50 in part due to hurricane fears.

Hurricane

According to the last weather report, hurricane Matthew is strengthening as it heads towards Florida.   Unless there is extensive damage, casualty insurance stocks are likely to go up.  We may post some trades as appropriate.

Natural Gas

Natural gas has also spiked on hurricane fears.  This is likely  a bridge too far.  First, there is not much natural gas production in Florida.  Second, there is not a strong indication that the hurricane is heading towards the Gulf of Mexico where there is a lot of natural gas production.  Third, increasingly new natural gas production is located away from hurricane prone areas.

Markets

Our very, very short-term early stock market indicator is neutral but expect the market to start out negative.

Gold has broken support at $1260 and silver has broken support at $17.50.

Yen is stabilizing after being weaker.

Interest rates continue to tick higher and bonds continue to tick lower.

Gold futures are at $1256, silver futures are at $17.43, and oil futures are $50.41.

S&P 500 resistance levels are 2165, 2200 and 2222; support levels are 2132, 2120, and 2100.

DJIA futures are down 36  points.

GOLD INSIGHT, WEAK ADP AND OIL APPROACHES $50

This is what you need to know today.

Gold Insight

Gold market action provided valuable insight yesterday as it went into free fall.  In ZYX Change Method as well as in ZYX Allocation Model, we pay a lot of attention to price action around key support and resistance levels. Gold had a very strong support in the zone of $1300 to $1308.  Normally a lot of backing and filling would have been expected in that zone.  Almost all of the gold gurus were out in force on Monday telling their followers to back up the truck and buy gold around $1305.  They were all looking at the same support level.  Gold price fell through that support zone like a hot knife through butter without any backing and filling and not on exceptionally large volume.  This augurs poorly for gold in the medium-term.

So far the momo crowd has tried to rally gold this morning by aggressive buying gold several times but each attempt has failed.

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Popular Gold ETF Destroyed

Junior Minor Gold ETF JNUG has been very popular among the gold momo crowd.  Our subscribers in general are very savvy.  However some new subscribers come with previously learned bad habits: from such subscribers we have received countless requests to recommend JNUG.  Of course we refuse because of the high risk involved and fundamentals not being supported.

On August 11, 2016, JNUG hit an intraday day high of  $33.29.  Yesterday JNUG closed at $11.38.  It is amazing that gurus who were putting strong buy on JNUG at $33 are still encouraging their followers to aggressive buy this ETF.

Weak ADP

ADP is the largest private payroll processor in the country.  It uses its data to provide an employment report ahead of the official employment report that will be released by the U. S. Department of Labor of Friday.

ADP came at 154K vs. 170K consensus. This is one of the few weak employment data points.

Oil

Oil is approaching $50 on API inventory coming at -7.6 million barrels vs. +2 million barrels consensus.

Markets

Our very, very short-term early stock market indicator is neutral but there is potential of market moving sharply in either direction around 10:00 am when ISM data will be released.

Interest rates, bonds, and currencies are range bound.

Gold futures are at $1274, silver futures are at $17.92, and oil futures are $49.72.

S&P 500 resistance levels are 2165, 2200 and 2222; support levels are 2132, 2120, and 2100.

DJIA futures are up 35  points.

GOLD FALLS BELOW $1300 AS POUND HITS POST BREXIT LOW, SURPRISE RATE CUT IN INDIA

This is what you need to know today.

Gold And Pound

Gold falls below $1300 key support as the pound falls below prior post Brexit low.

Paradoxically, FTSE 100 hits 17 month high on lower pound.

Please see yesterday’s Morning Capsule for the reasons behind these moves.

The momo crowd continues to aggressively buy gold and silver but their buying is unable to overcome selling by the smart money.

India

Reserve Bank of India led by the new governor cut its benchmark interest rate by 25 basis points to 6.25%.

In our analysis, this cut may not be the best thing and may raise concerns about Indian currency rupee.

Markets

Our very, very short-term early stock market indicator is neutral but can quickly turn in either direction.

Oil is higher on aggressive momo crowd buying, smart money is absent.

Dollar is higher against most currencies.

Interest rates are ticking up and bonds are lower

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Gold futures are at $1295, silver futures are at $18.57, and oil futures are $48.68.

S&P 500 resistance levels are 2165, 2200 and 2222; support levels are 2132, 2120, and 2100.

DJIA futures are up 27 points.

POUND NEAR A 30 YEAR LOW AS BREXIT START DATE SET, OIL MOVES HIGHER

This is what you need to know today.

Brexit

British Prime Minister, Theresa May, has stated that she plans to invoke Article 50 by the end of March 2017. This will start the process of Britain leaving the EU.

The pound fell to near a 30 year low on the speech.

As a full disclosure, ZYX Short Sell Change Alert has a position in the pound.

Oil

After falling in Asian trading, this morning oil is running up again mostly on short covering.

As a full disclosure, ZYX Buy Change Alert has a position in oil.

Gold

Gold and silver had rallied in Asian markets but are giving up most of the gains this morning.

Colombian Surprise

A deal between President Santos and the Marxist rebel group, that would have ended 52 years of violence, was struck down by Colombian voters.  This is a surprise similar to Brexit.

Trump

All one has to do is to look at Colombia and Brexit to know that surprises can happen.  Anti-government trend continues to brew across the world.

According to the mainstream media, Trump just had the worst week in presidential election history.  However Trump may be doing better than the polls suggest.

Wall Street is premature in writing off Trump.

Markets

Our very, very short-term early stock market indicator is negative.

Currencies, bonds and interest rates are range bound.

Gold futures are at $1316, silver futures are at $19.12, and oil futures are $48.56.

S&P 500 resistance levels are 2165, 2200 and 2222; support levels are 2132, 2120, and 2100.

DJIA futures are down 59 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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