WEEKLY MARKET DIGEST: MOM & POP GIDDY BUT PROFESSIONALS CAUTIOUS, SMART MONEY SELLS SILVER $DIA $GLD $QQQ $SLV $SPY $TBF $TBT $USO

   WEEKLY MARKET DIGEST: MOM & POP GIDDY BUT PROFESSIONALS CAUTIOUS, SMART MONEY SELLS SILVER $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.

88% RATE RISE ODDS, FED SPEAK AHEAD, SMART MONEY SELLS SILVER

This is what you need to know today.

88% Rate Rise Odds

The probability of a rate rise in March has now risen to 88%.

Fed Speak Ahead

Vice-Chairman Fischer will speak at 12:30 pm ET and Yellen will speak at 1:00 pm ET.  Both speeches have the potential to move the markets.

Smart Money Sells Silver

We recently shared with you that the momo  crowd was aggressively buying silver even when gold and miners were coming under pressure. Yesterday the ‘smart money’ sold silver aggressively around $18.40.  Silver quickly slipped under $17.80 as momo buying was not sufficient to contain the selling onslaught by the smart money.

Mexican Peso

Mexican peso jumped on a comment by Commerce Secretary Ross.  He said that Mexico could do well if it struck a good trade deal with the U. S.

Markets

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

Interest on two-year Treasuries is hitting the highest level since 2009.

Long-term interest rates are range bound.

Oil and  most currencies are range bound.

Gold futures are at $1229, silver futures are at $17.76, and oil futures are $52.80.

S&P 500 resistance levels are 2400, 2450 and 2500; support levels are 2363, 2334, and 2300.

DJIA futures are up 12   points.

MOM & POP GIDDY BUT PROFESSIONALS CAUTIOUS, INITIAL CLAIMS AT A 44 YEAR LOW, BRAINARD SENDS GOLD LOWER, RUSSIAN DATA PUSHES OIL DOWN

This is what you need to know today.

Mom & Pop Giddy But Professionals Cautious

Data is showing that mom & pop are giddy as their favorite talking heads talk up the market.  In sharp contrast, professionals are cautious as they understand without the short squeeze, yesterday’s market rally would have not taken place.  For details, please see the post from yesterday.

44 Year Low

Initial Jobless Claims came at 223K vs. 244K consensus.  This is a leading indicator and carries a heavy weight in our market timing models.

Brainard Sends Gold Lower

Brainard, one of the most dovish Fed officials, has suggested that conditions may soon be ripe for raising rates.  Simply put, Brainard has folded her low rate stance.

This is sending dollar higher and gold lower.

Russian Data Pushes Oil Down

Data shows that Russian oil production was unchanged at 11.11 million barrels per day in February.  This is causing oil bulls to wake up and pay attention to the data.  Yesterday, oil bulls ignored that inventories had reached a record 520.2 million barrels.

Markets

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

Bonds are ticking down and interest rates are ticking up.

Dollar is stronger.

Gold futures are at $1236, silver futures are at $18.36, and oil futures are $52.77.

S&P 500 resistance levels are 2400, 2450 and 2500; support levels are 2363, 2334, and 2300.

DJIA futures are up 21  points.

STOCKS LOVE TRUMP’S SPEECH, BEIGE BOOK AHEAD, PMI DAY, INDIA GDP AND GOLD GETS HIT

This is what you need to know today.

Stocks Love Trump’s Speech

The first reaction of the stock market is to love Trump’s speech.  Those who sold short yesterday expecting Trump to not give any details and consequently the market to fall are being forced to buy to cover this morning.  This is primarily the cause of the major upward pressure.  Short sellers were right in that Trump did not give details but bulls are citing  two factors.  First, Trump did not pick a fight with anyone. Second, the speech was conciliatory in nature.

Beige Book Ahead

Fed’s Beige Book will be released at 2:00 pm ET.  This is likely to be a market moving event. We will be looking for more signs of a rate increase in March.

PMI Day

China’s official Manufacturing PMI climbed to 51.6 vs. 51 consensus.

Euro Area Manufacturing PMI climbed to 55.4 vs. 54 consensus.

In the U. K. PMI fell to 54.6 vs. 55.8 consensus.

India GDP

Expectations were that India’s GDP would slow due to demonetization.  However the number came at 7% vs. 6% consensus.  GDP has barely slowed from 7.4% in the prior quarter.

Gold Gets Hit

The relentless selling in precious metal miners is finally affecting gold.  Gold has decisively broken support at $1250.

Momo crowd is aggressively buying silver this morning.

The ‘smart money’ is absent from both gold and silver.

Personal Income And Spending

Personal Income came at 0.4% vs. 0.4% consensus.  Personal Spending came at 0.2% vs. 0.3% consensus.

Markets

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

Bonds are being hit and interest rates are rising.

Oil is awaiting EIA data to be released at 10:30 am ET.

Dollar is stronger.

Gold futures are at $1243, silver futures are at $18.35, and oil futures are $54.20.

S&P 500 resistance levels are 2400, 2450 and 2500; support levels are 2363, 2334, and 2300.

DJIA futures are up 154 points.

MARKETS ON EDGE WAITING FOR TRUMP, HIGHER ODDS OF RATE RISE, FUND LIQUIDATES GOLD MINER STOCKS AND MOVES INTO BIOTECHS

This is what you need to know today.

Markets On Edge

Markets are on edge waiting for Trump’s speech tonight. So far the market has moved up on hope.  Traders are hoping for concrete details.  If there are not many details, expect disappointment.

Rate Rise

Odds of rate rise in March have now jumped to 50%.

GDP

Q4 GDP Second Estimate came at 1.9% vs. 2.1% consensus.

House Prices

Housing Prices 20 City Index came at 5.6% y/y vs. 5.4% consensus.

Out Of Precious Metals Into Biotechs

While gold and silver have held up remarkably well, it appears that a large fund has been liquidating precious metal stocks and moving the money into biotechs.    As a result of this shift, precious metal stocks have been crushed over the last two days while biotechs are breaking out.

One explanation is boarder adjustment tax (BAT).   Miners have lots of operations overseas and bringing gold into the U. S. may subject gold to BAT.  On the flip side, most biotechs are produced in the U. S. and there are no BAT issues.

In our analysis, this argument is highly speculative at this time as details of BAT are not known.

Markets

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

Bonds are ticking up and interest rates are ticking down.

Oil is slightly weaker.

Gold and silver are range bound.

Gold futures are at $1256, silver futures are at $18.38, and oil futures are $45.00.

S&P 500 resistance levels are 2400, 2450 and 2500; support levels are 2334, 2300, and 2288.

DJIA futures are down 2 points.

TRUMPS SPEECH TO TEST STOCK RALLY, BUDGET, DURABLE GOODS, GOLD STEADY

This is what you need to know today.

Trump’s Speech To Test Stock Rally

In a televised address, Trump will address Congress tomorrow. Investors are looking for details of tax cuts and fiscal stimulus.  The speech is not likely to provide such details.

The stock rally has been mostly based on hope.  Trump’s speech will be a test for the resilience of this rally. Even if Trump’s speech provides details, historically there are plenty of precedences in the stock market of selling on the news.

Budget

The outline of Trump’s budget has become available.  Trump will increase spending on defense.  Trump will cut spending on EPA and the State Department.  Trump is leaving the main drivers of deficit untouched, these are social programs.

Durable Goods

Durable Goods Ex-transport came at -0.2% vs. +0.5% consensus.  This number is very volatile month to month.  For this reason we look at a moving average.  There is no cause of concern at this time.

Gold Steady

Gold is steady.  There is a strong bid due to political risk and also from the momo crowd who is heralding break above $1250 and hoping for $1300 next.  There is no buying from the ‘smart money.’

Markets

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

Currencies with the exception of pound are range bound.

Interest rates and bonds are range bound.

Gold futures are at $1257, silver futures are at $18.40, and oil futures are $54.47.

S&P 500 resistance levels are 2400, 2450 and 2500; support levels are 2334, 2300, and 2288.

DJIA futures are down 19 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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