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.
MOMO BUYING AGGRESSIVELY AS TRUMP TAX REFORM TAKES ONE STEP FORWARD, SAFE HAVENS SOLD, JAPANESE ELECTION
To gain an edge, this is what you need to know today.
Trump Tax Plan
Yesterday the Senate passed a 2018 budget resolution. Republicans in the House have agreed to accept the Senate resolution. This paves the way for republicans to pass a tax reform without Democratic support.
Trump tax plan has taken an important step forward. This is very important because the market rally, in large part, has been supported by the hope of a tax reform.
Momo Buys Aggressively
In early trade, the momo crowd is aggressively buying stocks. The ‘smart money’ is inactive.
Gold And Bonds
As the momo crowd shifts to ‘risk on’ mode, they are selling safe havens of gold and bonds.
The smart money is inactive.
Japanese Election
This is election weekend for Japan. The latest polls in Japan show that Prime Minister Abe’s coalition may lose the two-thirds majority in the parliament. In theory, this may make it difficult to carry out reforms and should hurt the market. However, momo crowd continues to buy Japanese stocks on concern about the election.
Taylor Or Powell
There are reports that Taylor and Powell are the two top candidates for the Fed chair. Based on their past history, Powell will be positive for stocks and bonds but Taylor will be a negative.
Oil
Oil is being sold on reports that Iraq is resuming shipments from a disputed region.
Technical Patterns
Malaysian shares are tracing a Diamond Top. This is bearish. ETF of interest is EWM.
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.
Dollar is stronger and interest rates are ticking up.
Gold futures are at $1285, silver futures are at $17.21, and oil futures are $51.08.
S&P 500 resistance level is 2615; support levels are 2550, 2500 and 2450.
DJIA futures are up 88 points.
MOMO SELLS STOCKS, SPANISH CRISIS, GOLD AND BONDS SUPPORTED
To gain an edge, this is what you need to know today.
Momo Sells Stocks
Yesterday in the Morning Capsule we shared with you,
This is leading to aggressive buying by the momo crowd this morning in ETFs and futures.
The momo crowd continued to buy stocks aggressively throughout yesterday. The ‘smart money’ was inactive.
This morning in early trade, the momo crowd is aggressively selling stocks. The smart money is inactive.
Spanish Crisis
Madrid is planning to trigger Article 155 of the constitution to end independence drive in Catalonia. This is the ultimate weapon to end the brinkmanship that has been going on since the beginning of the month. Unless separatist in Catalonia back down, there is considerable headline risk over the next few days.
Gold And Bonds Supported
The momo crowd is buying gold and bonds this morning. This is being driven by the mood shifting to ‘risk off’ in early trade.
Oil
Oil is moving down as the mood shifts to ‘risk off.’
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.
Gold futures are at $1286, silver futures are at $17.00, and oil futures are $51.48.
S&P 500 resistance levels are 2550 and 2615; support levels are 2500, 2450 and 2425.
DJIA futures are down 88 points.
MORE GAINS ON IBM EARNINGS, CHINA ROAD MAP TO 2050, WEAK HOUSING STARTS, BEIGE BOOK
To gain an edge, this is what you need to know today.
More Gains On IBM Earnings
After years of decline, in its earnings, IBM is hinting of growth.
This is leading to aggressive buying by the momo crowd this morning in ETFs and futures.
China Road Map To 2050
Chinese President Xi Jinping has laid out a road map to turn China into a leading power by 2050. Stocks in Shanghai gained.
Gold
Gold is under pressure from the prospect of Taylor potentially becoming the Fed chair. Please see yesterday’s Morning Capsule.
Housing Starts
Housing starts came at 1127K vs. 1185K consensus. Building permits came at 1215K vs. 1250K consensus.
Normally the stock market would have been hit on this weak data. But today it is not going to make a difference because of aggressive buying by the momo crowd who is oblivious to any data other than the market is going up.
Beige Book
The Fed will release its Beige Book today at 2:00 pm ET. Often it is a market moving event.
Technical Patterns
Brazilian stocks are tracing a Diamond Top. This is bearish. ETF of interest is EWZ.
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.
Dollar is getting stronger.
Bonds are coming under pressure as interest rates tick up.
Oil is seeing aggressive buying.
Gold futures are at $1281, silver futures are at $16.96, and oil futures are $52.48.
S&P 500 resistance level is 2615; support levels are 2550, 2500 and 2450.
DJIA futures are up 98 points.
TAYLOR IMPRESSING TRUMP HITS GOLD AND BONDS BUT HELPS DOLLAR, STOCK MOMO OBLIVIOUS
To gain an edge, this is what you need to know today.
Who Is Taylor?
John Taylor is a Stanford University economist. He is known for Taylor rule. The rule relates inflation to interest rates. Taylor impresses Trump. Trump is looking for Yellen’s replacement at the Fed. There is a report that Trump met with Taylor for about an hour and was impressed.
Gold And Bonds Hit But Dollar Helped
The potential of Taylor becoming the next Fed chair is hitting gold and bonds but helping the dollar. The reason is that under Taylor rule, interest rates would be much higher.
Bonds and gold go down when interest rates go higher.
The dollar goes higher when interest rates go higher.
Stock Momo Oblivious
The stock market is mostly under the control of the momo (momentum) crowd. The momo crowd is not known for analysis. The momo crowd simply buys because stocks are going up. Their own buying makes stocks go even higher.
The momo crowd is oblivious to the Taylor speculation.
The momo crowd is buying stocks in early trading. The ‘smart money’ is inactive.
Earnings
Earnings season is in full swing. So far earnings are coming better than the consensus but in line with whisper numbers.
Technical Patterns
Gold has traced an Outside Bar. This is bearish. ETF of interest is GLD. Please note that there are new threats from North Korea that can make gold go higher.
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.
Oil is range bound.
Gold futures are at $1287, silver futures are at $17.07, and oil futures are $52.03.
S&P 500 resistance level is 2615; support levels are 2550, 2500 and 2450.
DJIA futures are up 24 points.
GOLD AND OIL RUNNING UP ON IRAQI ACTION, STOCK MOMO CROWD UNDETERRED, COMMODITIES SURGE
To gain an edge, this is what you need to know today.
Gold And Oil Running Up On Iraqi Action
Iraq has moved against Kurds in the northern oil rich province. Iraqi military has taken over a refinery, oil fields and a gas plant near the city Kirkuk. Oil and gold are running.
Stock Momo Crowd Undeterred
Momo crowd in stocks is undeterred by Iraqi move against Kurds. In early trading the momo crowd is buying stocks.
The ‘smart money’ is inactive.
Commodities Surge
Commodities are surging. Palladium is above $1,000 per ounce for the first time since 2001. Copper is at the highest level since 2014.
Spain
Spain is likely to move to suspend self rule in Catalonia if separatists do not back down.
Mexico
Trump administration is making several demands ahead of the next round of negotiations for NAFTA. Mexico’s peso has fallen to a five month low.
Technical Patterns
Several utilities are tracing a bearish Engulfing Line. This is bearish. ETF of interest is XLU.
Indonesian shares are tracing a Continuation Diamond. This is bullish. ETF of interest is EIDO.
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.
Interest rates are ticking down and bonds are ticking up on Iraq situation.
Euro is weaker.
Gold futures are at $1307, silver futures are at $17.46, and oil futures are $52.27.
S&P 500 resistance level is 2615; support levels are 2550, 2500 and 2450.
DJIA futures are up 25 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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