WEEKLY MARKET DIGEST: LOWER CPI FIRES UP STOCK, GOLD AND BOND BULLS; OIL GLUT TO END $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.

LOWER CPI FIRES UP STOCK, GOLD AND BOND BULLS; OIL GLUT TO END

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

Consumer Inflation

In yesterday’s Morning Capsule, we shared with you,

Tomorrow CPI will be released.  CPI measures inflation at the consumer level.  One concern is that inflation at producer level is not being passed on to consumers.

CPI was released this morning.  Core CPI came at 0.1% vs. 0.2% consensus.

Implication Of Lower CPI

Main implication of lower CPI is that the Fed may not raise interest rates.

Stock, Gold And Bond Bulls

Potential of interest rates not being raised is adding fuel to stock, gold and bond bulls this morning.  The momo crowd is aggressively buying all three.  The ‘smart money’ is inactive.

Gold has broken above $1300.

Oil Glut

OPEC is saying that the oil glut will end in 2018.  The momo crowd is aggressively buying 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 positive.

Gold futures are at $1302, silver futures are at $17.35, and oil futures are $51.71.

S&P 500 resistance level is 2615; support levels are 2500 2450 and 2425.

DJIA futures are up 26  points.

FED ON TRACK TO RAISE RATES BUT SOFT INFLATION WORRIES, HOTTER PPI, GOLD MOVES

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

Rate Hike

FOMC minutes show that Fed is on track to raise rates in December.

Soft Inflation Worries

FOMC minutes show that there is significant worry at the Fed about inflation staying low.

Hotter PPI

FOMC minutes are like looking in the rear view mirror.  This morning Producer Price Index (PPI) was released.  PPI measures inflation at the producer level.  Core PPI came at 0.4% vs. 0.2% consensus.  This data shows that inflation is running hotter than expected.

Tomorrow CPI will be released.  CPI measures inflation at the consumer level.  One concern is that inflation at producer level is not being passed on to consumers.

Cross Currents In Gold

Traditionally gold is a hedge against inflation.  In plain English, higher inflation is better for gold in the long-term.  However as the momo crowd has done over the last several years, they buy gold on weak inflation data and sell gold on high inflation data.

This time it is no different.  The momo crowd aggressively bought gold after the release of FOMC minutes.  The momo crowd is selling gold after the release of PPI.

Initial Jobless Claims

Initial Jobless Claims came at 243K vs. 255K consensus.  This is a leading indicator and carries a heavy weight in our models.

Oil

After a strong run yesterday on OPEC comments, oil is falling today on profit taking.

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, bonds and currencies are range bound.

Gold futures are at $1294, silver futures are at $17.19, and oil futures are $50.44.

S&P 500 resistance levels are 2550 and 2615; support levels are 2500, 2450 and 2425.

DJIA futures are down 20 points.

LISTLESS TRADE AHEAD OF FOMC, IMF WARNS, SPANISH STOCKS RISE, GOLD UNDER PRESSURE, OIL MOVES ON OPEC

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

Listless Trade

Early trade is listless as investors wait for FOMC minutes that will be released at 2:00 pm ET.

We will be carefully monitoring for signs of future rate hikes and if there is anything new about reducing Fed’s balance sheet.

IMF Warns

IMF recently upped its global growth forecast but is now warning that under the surface several risks are building.

IMF publishes one of the most well researched and authoritative reports on the world economy.

Spanish Stocks Rise

Spanish stocks and bonds are rising on the separatists backing off.

Gold Under Pressure

Gold is under pressure on reduction of tensions in Spain.

Japanese Stocks Hit Two-Decade High

Japan’s Nikkei 225 hit a two-decade high.

From a valuation perspective Japanese stocks continue to provide better value than the U. S. stocks.

Emerging Markets

Emerging market stock index hit a six-year high.

Emerging markets are providing significantly better value than the U. S. stocks at this time. However all emerging markets are not created equal.  Please see ZYX Emerging Markets ETF Alert that covers 15 emerging markets.

Oil Moves On OPEC

Oil is moving up on OPEC pronouncement that oil demand is strong.

Technical Patterns

Emerging markets are showing an Ascending Continuation Triangle.  This is bullish.  The ETF of interest is .

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.

Euro is stronger on reduced tensions in Spain.

Interest rates and bonds are range bound.

Gold futures are at $1292, silver futures are at $17.17, and oil futures are $51.11.

S&P 500 resistance levels are 2550 and 2615; support levels are 2500, 2450 and  2425.

DJIA futures are down 5 points.

SPANISH CRISIS SUPPORTS GOLD, MOMO BUYS STOCKS, CORKER PROBLEM AND FOMC MINUTES

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

Spanish Crisis Supports Gold

A key meeting of Catalan’s regional parliament is  taking place. Spanish police are ready to arrest the Catalan leadership if independence is declared.

The conflict is supporting gold.  Spanish stocks are falling but interestingly euro is gaining.

Momo Buys Stocks

In early trading the momo crowd is aggressively buying stocks.  Aggressive buying in stocks is led by buying in is a high flying semiconductor stock and the buying is coming after pronouncements regarding self-driving cars.  Also strength in the semiconductor group yesterday is spilling over into other sectors in early trade this morning.

The ‘smart money’ is inactive.

Corker Problem

Bob Corker is a prominent Republican Senator.  Corker and Trump have been feuding on Twitter ().  Given the slim margin the Republicans have in the Senate, the concern is that the dispute will hamper tax reform.  The recent strength in the stock market is attributed to the prospects of tax reform.

Dollar is lower due to the dispute but the momo crowd in the stock market is oblivious.

Oil

API and EIA data release has been delayed until Wednesday and Thursday.

The momo crowd is aggressively buying oil.

The smart money is inactive.

FOMC Minutes

Serious investors are focused on FOMC minutes.  FOMC minutes will be released tomorrow afternoon.

Technical Patterns

Gold is tracing an Island Bottom.  This is bullish.  ETF of interest is .

Bonds are tracing an Inside Bar. This is bullish.  ETF of interest is .

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 start higher.

Gold futures are at $1292, silver futures are at $17.19, and oil futures are $50.24.

S&P 500 resistance levels are 2550 and 2615; support levels are 2500, 2450 and 2425.

DJIA futures are up 54 points.

OPTIMISM FROM SPAIN AND CHINA SPILLING INTO U. S. STOCKS, U. S. SPAT WITH TURKEY A REMINDER OF RISK

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

Optimism From Spain And China Spilling Into U. S. Stocks

In early trading, optimism from China and Spain is spilling into U. S. stocks.

The momo crowd is buying aggressively.  The ‘smart money’ is inactive.

Spain Leads Europe

Spanish equities are leading gains in Europe.  This is the result of mass demonstrations over the weekend in Catalonia in favor of Spanish unity.

Chinese Banks

In Shanghai, investors aggressively bought Chinese banks.  This could be an early sign of another leg up in the Chinese market.

If the Chinese market takes another up-leg, there may be a spillover into U. S. stocks driving U. S. stocks higher.

U. S. Spat With Turkey A Reminder Of Risk

Over the weekend, U. S. suspended visa services for Turkish citizens looking to visit the U. S.  The U. S. move was prompted after the arrest of a Turkish employee of the U. S. consulate in Istanbul. Turkey responded quickly in-kind.

In early Asian trading, Turkish lira fell about 6% before recovering. Turkish stocks slumped.

The foregoing is a reminder that there are several global risks that temporarily investors are overlooking.  There are no signs of contagion spreading from Turkey at this time.  The history tells us that overbought markets like the one we are in now, are susceptible to contagions that can quickly spread.

Gold Supported On Turkey

On Friday gold had run up on rumors that over the weekend N. Korea would test another missile. Nothing significant happened.  Normally this would have caused gold to fall. However gold is being supported this morning by the situation in Turkey.

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 start higher.

Oil, bonds, interest rates and currencies are range bound.

Gold futures are at $1283, silver futures are at $16.92, and oil futures are $49.29.

S&P 500 resistance levels are 2550 and 2615; support levels are 2500, 2450 and 2425.

DJIA futures are up 38 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% – 29% and short to medium-term hedges of  15% – 25% and very short term hedges of 15%.

 

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