WEEKLY MARKET DIGEST: MIXED EARNINGS, NEW HARD ASSET CYCLE, NIGERIA CUTS OIL PRICES $DIA $GLD $QQQ $SLV $SPY $TBF $TBT $USO

 WEEKLY MARKET DIGEST: MIXED EARNINGS, NEW HARD ASSET CYCLE, NIGERIA CUTS OIL PRICES $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.

EURO BREAKS, NIGERIA CUTS OIL PRICES AND MIXED EARNINGS

This is what you need to know today.

Euro Breaks

This morning euro hit the lowest level against dollar since March breaking below $1.09 support.  This is  delayed reaction to Draghi press conference yesterday morning in which he said that ECB had not discussed taper.

Oil

Nigeria said that it cut the price of every grade of oil it sells to boost its market share.

Mixed Earnings

Earnings season is in full swing. In totality, so far, earnings have been mixed.  This morning industrial megacaps GE and HON reported lower than expected earnings.  MSFT, after the market close yesterday, reported better than expected earnings and is trading at a new all time high.

Markets

Our very, very short-term early stock market indicator is negative but can quickly turn positive.

Gold and silver fell yesterday on good economic data but are attempting a rally on strong momo crowd buying.

Interest rates, bonds and yen are range bound.

Gold futures are at $1267, silver futures are at $17.51, and oil futures are $50.24.

S&P 500 resistance levels are 2132, 2150 and 2165; support levels are 2120, 2100, and 2063.

DJIA futures are down 108  points.

QUIET TRADING POST DEBATE AND ECB

This is what you need to know today.

ECB

European Central Bank left rates unchanged.  Answers to questions in the press conference are mostly in line with the consensus.

Debate

Market participants believe that last night’s presidential debate did not change anything that would affect the markets.

Brazil

Brazil cut its interest rate for the first time in four years.

Philippines

Philippines, a major U. S. ally, appears to be ready to abandon the U. S. on a key issue and side with China.  Philippines has indicated a willingness to abandon a court victory on South China issues.

Markets

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

Gold, oil, currencies, interest rates and bonds are range bound.

Gold futures are at $1271, silver futures are at $17.66, and oil futures are $50.87.

S&P 500 resistance levels are 2150, 2165 and 2180; support levels are 2120 2100, and 2063.

DJIA futures are down 28 points.

CHINA STABLE, WEAK U. S. HOUSING STARTS, GOLD BUYING AND RECORD SAUDI BOND SALE

This is what you need to know today.

China Stable

Chinese GDP came at 6.7% in line with consensus.  This will allow the government to undertake reforms especially in the property sector.

Housing Starts

Housing Starts came at 1047K vs. 1168K consensus.  This is a very weak number and we will keep a close eye on it.

The leading indicator here is building permits. Building Permits came at 1225K s. 1164K consensus.

Gold

Momo crowd is aggressively buying gold and silver.  The theory is that support at $1250 held and the next step is $1400.

Oil

Oil is higher on API data.  API Inventory Data came at -3.8 million barrels vs. +2.5 million barrels consensus.  EIA data will be released at 10:30 am ET.

Record Saudi Bond Sale

Yield hungry investors are snapping up to $17.5 billion of Saudi bonds.  This is the first ever bond sale by Saudi.  This is also an emerging market bond sale record.  Previous record was $16.5 billion bond sale by Argentina earlier this year.

Markets

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

Bonds, interest rates and currencies are range bound.

Gold futures are at $1271, silver futures are at $17.73, and oil futures are $51.30.

S&P 500 resistance levels are 2150, 2165 and 2180; support levels are 2120, 2100, and 2063.

DJIA futures are up 43 points.

GLOBAL RALLY ON SPECULATION OVER CHINESE DATA

This is what you need to know today.

Global Rally

A global rally is taking place in stocks, bonds, gold, silver, oil and other commodities as speculation builds on Chinese data.

Chinese Data

Third quarter Chinese GDP data will be released tonight.  Consensus is 6.7%.

Debate Optimism

The third presidential debate will take place tomorrow night.  Markets have already awarded the presidency to Clinton.  Among market participants there is a lot of optimism that Clinton might win the debate.

Consumer Price Index

September Core CPI came at 0.1% vs. 0.2% consensus.  This weaker number flies in the face of optimism that is prevailing in the markets this morning.  At least temporarily markets are ignoring this weaker number.  If markets start concentrating on this number, the global rally can fizzle quickly.

Markets

Our very, very short-term early stock market indicator is positive but can reverse quickly.

There is strong buying in bonds, gold, silver, oil, and other commodities.

Dollar is slightly weaker.

Gold futures are at $1263, silver futures are at $17.70, and oil futures are $50.29.

S&P 500 resistance levels are 2150, 2165 and 2180; support levels are 2132, 2120, and 2100.

DJIA futures are up 104 points.

YELLEN FOR HIGHER INFLATION, FISCHER AHEAD, AND POTENTIAL FOR A NEW HARD ASSET CYCLE

This is what you need to know today.

Higher Inflation

Yellen said she is willing to tolerate higher inflation to shake the economy out of the low-growth mode.

Bonds Sell Off

There has been a big sell off in bonds over Yellen’s comments.

Fischer Ahead

Now markets are looking to Fed Vice Chairman, Fischer speaking later today. His speech is likely to be a market moving event.

Industrial Production

Yellen may be willing to tolerate higher inflation but will she get it?

Industrial Production came at 0.1% vs. 0.2% consensus.

Capacity Utilization came at 75.4% vs. 75.6% consensus.

These are weak numbers.

Markets

Our very, very short-term early stock market indicator is neutral but expect stocks to start lower and technicals to drive the market.

Oil, currencies, gold and silver are range bound.

Gold futures are at $1256, silver futures are at $17.44, and oil futures are $50.04.

S&P 500 resistance levels are 2132, 2150 and 2165; support levels are 2120, 2100, and 2063.

DJIA futures are down 16  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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