WEEKLY MARKET DIGEST: MOMO BUYING STOCKS ON TAX REFORM, SMART MONEY SELLS TECK STOCKS $DIA $GLD $QQQ $SLV $SPY $TBF $TBT $USO

WEEKLY MARKET DIGEST: MOMO BUYING STOCKS ON TAX REFORM, SMART MONEY SELLS TECK STOCKS $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.

MCCAIN ROCKETS STOCKS, SMART MONEY SELLS TECH INTO STRENGTH, BONDS UP ON NEW HITCH

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

McCain Rockets Stocks

Those who do not like the tax reform have been pinning their hopes on Senator McCain for a good reason.  Previously Senator McCain had the courage to stop repeal of Obamacare from passing.  Yesterday, the moment the news hit that McCain would support the tax bill, stocks took off and had one of the best days of the year.

Bonds Up On New Deficit Hitch

Republicans have scrapped the plan that would have avoided excessive future deficits.  There is a concern that this may roil deficit hawks.

The smart money is aggressively buying bonds as a hedge to protect itself if this new hitch causes problems.

Smart Money Sells Tech Into Strength

The smart money sold tech stocks into the strength.  The smart money bought large cap financials and industrials.

Gold

Interestingly smart money is buying bonds as a hedge and not gold this morning.  Trading in gold is listless.

Oil

Oil is seeing buying by the momo crowd on OPEC agreement.

Senate Vote

The Senate will convene in about an hour. The market’s expectation is that the Senate will pass the tax reform bill.

Buy The News, Sell The Rumor

There is an old adage, “buy the rumor, sell the news.” Often there is a lot of wisdom in such adages. So far investors have been buying the rumor of the tax reform. Any time there is negative development on any front, investors ignore it and pin their hopes on the upcoming tax reform.

Markets look ahead. When the tax reform becomes near certainty or actually becomes law, investors will no longer have tax reform to look forward to.

Selling on the news may be delayed but there is a significant probability of it occurring.

Technical Patterns

Oil and gas service stocks are tracing a Bottoming Triangle.  This is bullish. ETFs of interest are OIH and XES.

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 high volatility based on rumors and news related to tax reform.

Euro is weaker.

Gold futures are at $1276, silver futures are at $16.38, and oil futures are $58.27.

S&P 500 resistance level is 2658; support levels are 2631, 2615, and 2594.

DJIA futures are up 17  points.

AGGRESSIVE MOMO BUYING IN STOCKS, OPEC AGREEMENT, GOLD SOLD

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

Aggressive Momo Buying

Yesterday the smart money aggressively sold tech stocks but bought large cap diversified S&P 500.  Selling in tech stocks carried overnight to Asia.  Asian tech stocks were sold.  However this morning in the U. S., momo (momentum) crowd is aggressively buying stocks including tech stocks.

OPEC Agreement

OPEC has reached an agreement to extend oil production cut to the end of 2018.

Gold

The selling in gold that started when gold was approaching $1300 has continued.  The smart money is inactive.

Economic data

Initial Jobless Claims came at 238K vs. 238K consensus.  This is a leading indicator and carries heavy weight in our models.

Personal Income came at 0.4% vs. 0.3% consensus.  Personal Spending came at 0.3% vs. 0.3% consensus.  The U. S. economy is about 70% based on consumers, for this reason it is important to pay attention to personal income and personal spending.

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 but can reverse quickly.

Interest rates, bonds and currencies are range bound.

Gold futures are at $1280, silver futures are at $16.43, and oil futures are $57.81.

S&P 500 resistance level is 2658; support levels are 2631, 2615 and 2594.

DJIA futures are up 127 points.

STOCKS ROCKET ON TAX REFORM CLEARING THE PANEL, GDP REVISION, WASHINGTON WITHIN N. KOREAN MISSILE REACH

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

Stocks Rocket On Tax Bill

Stocks rocketed on tax bill passing the Senate Budget Committee.  We will be updating you in a separate post on flows.

Washington Within Reach Of North Korean Missile

North Korea launched a more advanced ballistic missile.  This advance potentially puts Washington within the reach of a North Korean missile.  Market fell on the news but then rocketed up after forming a V bottom on tax reform news.

GDP

GDP has been revised to 3.3% from earlier 3%.  This indicates faster economic growth.

Gold

Gold was getting support from North Korean missile launch and concerns about higher U. S. debt.  However significant sellers appeared as gold approached $1300.

For liquidity reasons, we are switching to gold February 2018 contract and silver to March 2018 contract.

Oil

Oil is range bound on potential news from OPEC.

For liquidity reasons, we are switching to January 2018 oil contract.

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 market to start out with a significant up move.

Interest rates are ticking down and bonds are ticking up.

Currencies are range bound

Gold futures are at $1290, silver futures are at $16.74, and oil futures are $57.62.

S&P 500 resistance levels are 2631 and 2658; support levels are 2615, 2594, and 2550.

DJIA futures are up 86  points.

HIGHER U. S. DEBT EMBOLDENS BOTH STOCK AND GOLD BULLS FOR DIFFERENT REASONS

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

Higher U. S. Debt

The tax plan being considered will increase the federal deficit by $1.5 trillion.  This new deficit will be financed by debt.

Debt Emboldens Stock Bulls

The economic theory is that the debt will fuel the economy and more money will go into the stock market.  This is emboldening stock market bulls.

In early trade, the momo crowd is aggressive buyers of stocks.  The ‘smart money’ is inactive.  Persistent inactiveness of the smart money indicates that the smart money has concerns about the new debt.

Debt Emboldens Gold Bulls

The theory of the gold bulls is that the debt will weaken the U. S. dollar and ultimately cause the U. S. economy to collapse.  This is emboldening gold bulls.

In early trade, the momo crowd is lightly buying gold. The smart money is inactive.

Powell Confirmation Hearings

Powell will be the next Fed chair.  He is likely to sail through the confirmation hearings.

Oil

Oil is under slight pressure as apprehension builds ahead of November 30 OPEC meeting.

Technical Patterns

Gold miners are showing Triple Bottom. This is bullish.  ETFs of interest are GDX and NUGT.

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 can easily reverse as the market is very overbought.

Bonds are higher and interest rates are lower.

Dollar is slightly stronger.

Gold futures are at $1295, silver futures are at $17.13, and oil futures are $57.84.

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

DJIA futures are up 58 points.

STOCKS SETTING ASIDE CHINA LEVERAGE CONCERNS ON TAX REFORM BUT NOT GOLD

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

China Leverage Concerns

Chinese government appears to be cracking down on leverage.  Shanghai Composite Index slid 0.9% after volatile trading late last week during the U. S. holiday.

Encouraging News From Germany

The standoff in Germany has eased and there are hopes that a new coalition will emerge to form a new government without a reelection.

Stocks

As U. S. traders come back to work from the holiday, they are ignoring concerns about China and instead focusing on the tax reform.  The U. S. Senate could vote on tax reform this week.

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

Gold

Concerns about China are spilling into the buying of gold.  Lower dollar is also helping gold.  The momo crowd is buying but the smart money is inactive.

Oil

OPEC meets on November 30th.  In the meanwhile, reports of an agreement between Russia and OPEC for a production cut is keeping new buying coming into oil.

Technical Patterns

Several home builders are tracing a Shooting Star.  This is bearish.  ETF of interest is XHB.

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 a quick downturn can occur if market starts focusing on China.

Euro and yen are stronger.

Interest rates and bonds are range bound.

Gold futures are at $1295, silver futures are at $17.10, and oil futures are $58.34.

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

DJIA futures are up 12 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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