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.
QUADRUPLE WITCHING, NAVARRO IGNITES A STRONG RALLY BUT MUELLER KILLS IT
To gain an edge, this is what you need to know today.
Quadruple Witching
Today is quadruple witching when index futures, index options, single stock options, and single stock futures expire.
Quadruple witching is causing extra volatility.
Navarro Ignites A Strong Rally
Peter Navarro is a Trump advisor and is the force behind tariffs and protectionism. The stock market staged a strong rally after Peter Navarro gave an interview that was more moderate than expected.
Mueller Kills The Strong Rally
Special Prosecutor Mueller has issued a subpoena to obtain Trump’s business documents. Mueller is risking crossing Trump’s red line. The news of the subpoena killed the strong rally.
Momo And Smart Money
The momo crowd got whipsawed and was a big loser but that is not preventing momo from aggressively buying again as of this writing.
Smart money is inactive.
Strong Industrial Production
Industrial production came at 1.1% vs. 0.3% consensus.
Capacity Utilization came at 78.1% vs. 77.7% consensus.
These numbers mean manufacturing is going strong.
Gold
Gold is range bound but acting like a yo-yo following the dollar.
Oil
Oil is range bound. Baker Hughes rig count will be released at 1:00 pm ET and may move the markets. Pre weekend trading may also bring some short covering.
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.
Interest rates are ticking up and bonds are ticking down.
Gold futures are at $1318, silver futures are at $16.43, and oil futures are $61.40.
S&P 500 resistance levels are 2765, 2800 and 2840; support levels are 2740, 2700, and 2688.
DJIA futures are down 4 points.
KING DOLLAR ADVOCATE IN THE WHITE HOUSE — GOOD FOR STOCKS BUT BAD FOR GOLD, MOMO YO-YO
To gain an edge, this is what you need to know today.
King Dollar
Trump has picked Larry Kudlow as his economic advisor. Kudlow is known for advocating a strong dollar and free trade with some restrictions on China.
Good For Stocks
Kudlow’s views are good for stocks. He may help avert a trade war.
Bad For Gold
A strong dollar is inherently bad for gold because gold is priced in dollars. Moreover Kudlow seems to advocate selling gold.
This morning gold is under pressure due to Kudlow appointment. The momo crowd is selling gold. The smart money is inactive.
Momo Yo-Yo
During yesterday’s trading, according to our algorithms, the momo crowd behaved like a yo-yo. The momo aggressively bought and aggressively sold several times during the day. In the process the momo crowd lost money.
This morning, the momo crowd was inactive until a few minutes ago but has started buying aggressively as of this writing.
The smart money is inactive.
Jobless Claims
Initial Claims came a 226K vs. 226K consensus.
Technical Patterns
Long bonds are tracing a Double Bottom. This is bullish. ETF of interest is TLT.
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.
Bonds and interest rates are range bound.
Dollar is stronger.
Gold futures are at $1319, silver futures are at $16.44, and oil futures are $61.25.
S&P 500 resistance levels are 2765, 2800 and 2840; support levels are 2740, 2700, and 2688.
DJIA futures are up 78 points.
WEAK RETAIL SALES, INFLATION DATA IN LINE
To gain an edge, this is what you need to know today.
Weak Retail Sales
The U. S. economy is about 70% dependent on the consumer. For this reason, we pay a lot of attention to retail sales.
Retail Sales Ex-auto came at 0.2% vs. 0.4% consensus. We filter out the auto data simply because it is too noisy and hinders good analysis. Please click here to see how we filter the noise.
Producer Price Index
Core PPI came at 0.2% vs. 0.2% consensus.
Headline PPI came at 0.2% vs. 0.1% consensus, a little bit hotter than expectations. We use Core PPI in our models because experience has shown that is what really matters in the long term for good analysis.
Momo Crowd And Smart Money
In yesterday’s Morning Capsule we wrote:
This morning the momo crowd is aggressively buying. Every time DJIA futures run up over 120 points, light selling by smart money appears.
The pattern continued after the market opened with the momo crowd aggressively buying, running the market up and smart money selling into the strength. Ultimately the market scumbled to smart money selling and lost the momentum. When the momentum was lost and the market turned negative, the momo crowd started aggressively selling, driving the market significantly lower. At the lows of the day, smart money stepped in to lightly buy causing some recovery in the market.
Yesterday the momo crowd got whipsawed and lost money first on the long side and then from the short side.
This morning the momo crowd is again buying aggressively but smart money is inactive.
Gold
Gold saw some buying on weak retail sales. The theory being that the data is supportive of the Fed not increasing rates aggressively. Gold does better when interest rates are lower.
Buying in gold has fizzled as of this writing as gold buyers are having second thoughts. The Fed is on a trajectory to raise rates and this one number of weaker retail sales is not going to stop the Fed from likely raising rates next week.
Oil
API data showed 1.2M barrel draw in crude roughly in line with consensus. More importantly the data showed gasoline draw of 1.3M barrels and distillate draw of 4.3M barrels.
Trading in oil is listless waiting for EIA data that is considered more authoritative. EIA data will be released at 10:30 am ET. Consensus is for a build of 2.5M barrels.
Technical Patterns
Vietnamese stocks are tracing a Symmetrical Continuation Triangle. This is bullish. ETF of interest is VNM. As a full disclosure, ZYX Global and ZYX Emerging have positions in VNM.
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.
Currencies are range bound.
Gold futures are at $1323, silver futures are at $16.56, and oil futures are $61.15.
S&P 500 resistance levels are 2800, 2840 and 2860; support levels are 2765, 2740, and 2700.
DJIA futures are up 79 points.
U. S. TECH NOT FOR SALE, HIGHER INFLATION BUT NOT ENOUGH TO SPEED UP THE FED
To gain an edge, this is what you need to know today.
U. S. Tech Not For Sale
President Trump has blocked AVGO from trying to buy QCOM. President Trump is sending a message that U. S. tech is not for sale.
Inflation
Core Consumer Price Index (CPI) came at 0.2% vs. 0.2% consensus. This number indicates that inflation is picking up but not enough to speed up the Fed in raising interest rates.
Smart Money And Momo Crowd
The momo crowd was aggressive sellers yesterday. This morning the momo crowd is aggressively buying.
Every time DJIA futures run up over 120 points, light selling by smart money appears.
Gold
Gold ran up after release of the CPI number as the dollar weakened. The dollar weakened on the prospects that the Fed may not be as aggressive in raising rates after middling CPI.
The momo crowd is aggressively buying gold.
The smart money is inactive.
Oil
The smart money continues to sell oil into the strength.
The momo crowd continues to buy oil.
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 down and bonds are ticking up.
Gold futures are at $1325, silver futures are at $16.61, and oil futures are $61.09.
S&P 500 resistance levels are 2800, 2840 and 2860; support levels are 2765, 2740, and 2700.
DJIA futures are up 96 points.
MOMENTUM FROM GOOD JOBS REPORT CONTINUES, SMART MONEY NOT SELLING INTO THE STRENGTH
To gain an edge, this is what you need to know today.
Momentum From Jobs Report
The momentum from Friday’s good jobs report continues this morning.
Momo Crowd And Smart Money
The momo crowd is aggressively buying in the early trade. The smart money is not selling into the strength. This is interesting because previously since the start of February, smart money often sold into the strength. We will carefully monitor smart money’s actions.
Gold
Money is coming out of gold. This is interesting because the dollar is weaker. Normally when the dollar is weaker, gold goes up.
Oil
Oil is weaker on rising U. S. shale production.
Technical Patterns
S&P 500 is tracing a Symmetrical Continuation Triangle. This is bullish. The ETF of interest is SPY.
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.
Bonds and interest rates are range bound.
Gold futures are at $1317, silver futures are at $16.47, and oil futures are $61.54.
S&P 500 resistance levels are 2800, 2840 and 2860; support levels are 2765, 2740, and 2700.
DJIA futures are up 51 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% – 33% and short to medium-term hedges of 15% – 25% and very short term hedges of 20%.
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