WEEKLY MARKET DIGEST: MISLEADING HEADLINE ABOUT NEW YORK FED PRESIDENT SPEECH SAVES THE MARKET AND RUNS GOLD $DIA $GLD $QQQ $SLV $SPY $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.

MISLEADING HEADLINE ABOUT NEW YORK FED PRESIDENT SPEECH SAVES THE MARKET AND RUNS GOLD

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

Bulls Run On Misleading Headline

Yesterday, stocks were falling.  A micro-support was broken. Downward pressure was accelerating. The momo crowd was beginning to sell.  There were all the hallmarks of the market falling 3 – 5%.  Then came the headline that the New York Fed President John Williams said that central banks should move quickly as referring to the upcoming Fed meeting.  Machines that read the news headlines appear to have started buying aggressively on the headline.  The stock market turned with massive waves of buying after the turn.  Not only the stock market turned, gold had an explosive rally.  Bonds also rallied.

It turns out that the headline was misleading.  New York Fed has clarified that it was a prepared speech on 20 years of research in academic context; it was not a short term signal.

One would think that the Fed officials are smarter than this.  They have to know that the market is controlled by the momo crowd and machines only read headlines.  The momo crowd doesn’t do any research.

Momo Crowd And Smart Money In Stocks

The momo crowd is buying stocks in the early trade.  Smart money is lightly selling into the strength.

Gold

Gold staged a massive rally on misleading John Williams headline.  Smart money lightly sold near the highs causing gold to pullback.  As of this writing, the momo crowd is aggressively buying gold again.

Buying has been especially aggressive in silver.

Oil

Oil bounced off from a support zone on the news that the U. S. shot down an Iranian drone.

Smart money sold oil near the highs yesterday.  As of this writing in the early trade, smart money is inactive.  The momo crowd is acting like a yo-yo.

Marijuana

There is no material smart money or momo crowd activity in the early trade.

Technical Patterns

Semiconductors are tracing a ascending continuation triangle.  This is bullish.  ETF of interest is SMH.

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 but has the potential quickly turn negative especially if traders start paying attention that yesterday’s rally was misplaced.  This indicator, with a great track record, is popular among long term investors to stay in tune with the market and among short term traders to independently undertake quick trades.

Interest rates are ticking up and bonds are ticking  down.

The dollar is stronger.

Gold futures are at $1437, silver futures are at $16.41, and oil futures are $55.82.

S&P 500 resistance levels are 3020 and 3050; support levels are 2950, 2925 and 2918.

DJIA futures are up 105 points.

EARNINGS SO FAR WORSE THAN LOWERED ESTIMATES

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

Earnings

Earnings season is in full swing.  Earnings are the single best determinate of the stock market in the long term.  Before the earnings season started, analysts were lowering their earnings estimates.  So far, on average, earnings are coming in worse than the already lowered estimates.

We will be carefully watching to see if this trend continues or reverses.

Offset To Poor Earnings

There is an artificial but very powerful offset to the poor earnings. The offset is Powell’s decision to buckle under the political pressure and spike the punch bowl irrespective of the data.

Jobless Claims

Initial Jobless Claims came at 216K vs. 215K consensus.

Momo Crowd And Smart Money In Stocks

The momo crowd is buying stocks in the early trade.  Smart money is inactive.

Gold

The momo crowd is aggressively buying gold.  Smart money is inactive.

Oil

The momo crowd is aggressively selling oil. Smart money is inactive.

IEA call that a big oil glut is ahead next year is gaining traction.

Marijuana

A big Wall Street bank downgraded ACB.

The momo crowd is buying marijuana stocks.  Smart money is inactive.

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 but can easily turn positive as the market has relieved a very overbought condition in the short term.  This indicator, with a great track record, is popular among long term investors to stay in tune with the market and among short term traders to independently undertake quick trades.

Interest rates are ticking up and  bonds are ticking down.

The dollar is weaker.

Gold futures are at $1415, silver futures are at $16.10, and oil futures are $57.17.

S&P 500 resistance levels are 3020 and 3050; support levels are 2950, 2925 and 2918.

DJIA futures are down 90 points.

POWELL IN PARIS READY TO SPIKE THE PUNCH BOWL, THE NEW BIG MARIJUANA GIANT

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

Spike The Punch Bowl

Our analysis of Powell’s speech in Paris is that he is ready to spike the punch bowl irrespective of the data.  This appears to be a case where a decision is made first and then arguments are found to support the decision.

Of interest will be if there are any dissenters at FOMC.  So far, any potential dissenters have not been public.

We have previously written that this is good for the stock market in the short term but bad in the long term. Our message to investors is clear from the title of the prior post,

The U. S. stock market is like a drunken party — stay for a while but know when to leave.

Housing Starts

Housing Starts came at 1253K vs. 1270K consensus.

Building Permits came at 1220K vs. 1300K consensus.

Momo Crowd And Smart Money In Stocks

The momo crowd is buying stocks in the early trade. Smart money is inactive.

Gold

The momo crowd is acting like a yo-yo in gold.  Smart money is inactive.

Oil

The momo crowd is acting like a yo-yo.  Smart money is inactive.

API data shows that crude inventories fell 1.4 million barrels vs. consensus of a fall of 2.7 million barrels.

Marijuana

CURLF is buying Grassroots for $875 million.  This will make CURLF the world’s largest marijuana company by revenue and the largest in the U. S. by a number of metrics.  The momo crowd is buying marijuana stocks.  Smart money is inactive.

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.

Currencies are range bound.

Gold futures are at $1409, silver futures are at $15.77, and oil futures are $58.28.

S&P 500 resistance levels are 3020 and 3050; support levels are 2950, 2925 and 2918.

DJIA futures are down 11 points.

STRONG RETAIL SALES SHOW THAT IT IS TIME FOR THE FED TO TAKE AWAY THE PUNCH BOWL, POWELL SPEECH

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

Strong Retail Sales

Retail Sales Ex-auto came at 0.4% vs. 0.2% consensus.  We exclude auto because auto data is noisy and hinders analysis of the core trends.  Please click here to see how we filter the noise.

The U. S. economy is about 70% consumer based.  Therefore it is important to pay attention to retail sales.

Powell Speech

Powell will be speaking at 1:00 pm ET in Paris.  We will be paying close attention to see if he is still on track to spike the punch bowl.  The speech has the potential to be a  market moving event.

The Punch Bowl

Traditionally the Fed’s job has been to take the punch bowl away at about this time in the economic cycle so that the asset bubble does not inflate.  In sharp contrast to tradition, this time the Fed is getting ready to spike the punch bowl to further inflate the asset bubble.

As we have written before, money is to be made from the Fed’s actions in the short term but in the very long term, this cannot end well.  Investors ought to be alert and not get complacent.

Momo Crowd And Smart Money In Stocks

The momo crowd is buying stocks in the early trade.  Smart money is inactive.

Gold

The momo crowd was buying gold before the retail sales data came.  Smart money has stepped in to lightly sell gold after strong retail sales data.  As the momentum reversed, due to smart money selling, momo crowd has stopped buying as of this writing.

As a note of caution, the foregoing is very, very short term.  If the Fed continues on its present course, in the very long term, gold is likely to do very well.

Oil

The momo crowd is acting like a yo-yo in oil.  Smart money is inactive in the early trade but lightly sold near the highs yesterday.

Marijuana

The momo crowd is buying marijuana in the early trade. It appears that a majority of those who were panicked about their losses have already sold.  Now marijuana stocks are at a critical junction.  They can easily take another leg down or bounce right back from here.

Smart money is inactive.

Technical Patterns

Nasdaq 100 has traced a hanging man.  This is bearish.  ETF of interest is QQQ.

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 but expect the market to open higher..

Interest rates are ticking up and bonds are ticking down.

The dollar is stronger.

Gold futures are at $1411, silver futures are at $15.41, and oil futures are $59.92.

S&P 500 resistance levels are 3020, 3050 and 3100; support levels are 2950, 2925 and 2918.

DJIA futures are up 8 points.

CHINA GROWTH SLOWEST SINCE 1992, MARIJUANA SELLOFF

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

China Growth

China growth slowed to 6.2% vs. 6.2%.  This is the slowest growth since 1992. However there are three important observations.

  • The number is better than the whisper numbers.
  • The data got better in June.
  • The data may prompt the Chinese government to increase stimulus.  This stock market is addicted to stimulus and may like it.

In a perverse way, the weak data is positive for the stock market.

Momo Crowd And Smart Money In Stocks

The momo crowd is buying stocks in the early trade. Smart money is inactive.

Gold

The momo crowd is buying gold in the early trade.  Smart money is inactive.

Oil

The momo crowd is buying oil in the early trade on concerns about Iran and 70% of oil production being shut down in the Gulf of Mexico.  Smart money is inactive.

Marijuana

We have been sharing with you for awhile that marijuana stocks are overbought and there was not fundamental support for high prices.  For a while the stock prices were sustained because the momo crowd continued to aggressively buy.  We shared with you in the Friday Morning Capsule:

The momo crowd is selling marijuana stocks in the early trade.

Please note that the momo crowd has previously been buying and not selling.  Momo crowd selling caused a major downdraft in marijuana stocks on Friday.

When stocks are overbought, often a negative news becomes a trigger for selling.  In this case, troubles at CTST have become the trigger for selling.

In the early trade, there is no material momo crowd or smart money activity.

Technical Patterns

Indian stocks are tracing an inside bar. This is bullish.  ETF of interest is EPI.

Home construction stocks are tracing a continuation diamond.  This is bullish.  ETF of interest is ITB.

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.

The dollar is slightly stronger.

Gold futures are at $1416, silver futures are at $15.38, and oil futures are $60.37.

S&P 500 resistance levels are 3050 and 3100; support levels are 2950, 2925 and 2918.

DJIA futures are up 58 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  5% – 15% and short term hedges of 0% – 5%.

 

A knowledgeable investor would have turned $100,000 into over $1,000,000 with the help from The Arora Report. NOW YOU TOO CAN ALSO SPECTACULARLY SUCCEED AT MEETING YOUR GOALS WITH THE HELP OF THE ARORA REPORT. You are receiving less than 2% of the content from our paid services. …TO RECEIVE REMAINING 98% INCLUDING MANY ATTRACTIVE INVESTMENT OPPORTUNITIES, TAKE A FREE TRIAL TO PAID SERVICES.

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