WEEKLY MARKET DIGEST: MOMO CROWD BUYING ON POTENTIAL TRADE DEAL IGNORING OTHER DATA, MARIJUANA SELLOFF $DIA $GLD $QQQ $SLV $SPY $TBT $USO

WEEKLY MARKET DIGEST: MOMO CROWD BUYING ON POTENTIAL TRADE DEAL IGNORING OTHER DATA, MARIJUANA SELLOFF $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.

MOMO BUYING ON KUDLOW COMMENT — WEAK RETAIL SALES IGNORED, MARIJUANA SELLOFF

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

Kudlow Comment

There is strong momo crowd buying in the stock market on the White House economic advisor Larry Kudlow’s comment that there “was very good progress” and a trade deal with China  was near.

Retail Sales

October Retail Sales Ex-auto came at 0.2% vs. 0.4% consensus.  If it was not for the momo crowd dominance, this weak number should have caused a selloff in the market.  The reason is that the consumer is 70% of the U. S. economy. Lately the other data from the consumer side has been strong while the data from business spending has been weak.

As of this writing, this weak data is being lost in the excitement over Kudlow’s comment.

Momo Crowd And Smart Money In Stocks

The momo crowd is aggressively 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.

For longer term, please see gold and silver ratings.

Oil

EIA data showed an inventory build of 2.2M barrels vs. consensus of a draw of 1M barrels.

This data is bearish for oil.  However oil is getting support from Kudlow’s comment regarding the trade deal.

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

For longer term, please see oil ratings.

Marijuana

ACB reported earnings worse than the consensus and significantly worse than the whisper numbers.

The momo crowd is aggressively selling marijuana stocks.  Smart money is inactive.

Technical Patterns

European financials are tracing an outside bar.  This is bullish.  ETF of interest is EUFN.

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 quickly swing negative on news and rumors.  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 bonds are ticking  down.

The dollar is weaker.

Gold futures are at $1467, silver futures are at $16.90, and oil futures are $57.00.

S&P 500 resistance levels are  3125 and 3143; support levels are 3050, 3020 and 2950.

DJIA futures are up 104 points.

FED ON HOLD, WEAK DATA FROM CHINA AND JAPAN, MARIJUANA SELLOFF

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

Fed On Hold

The sum total of Powell’s speech before Congress is that the Fed is on hold.

Weak Data From China

Industrial production in China grew 4.7% year-on-year in October vs. consensus of 5.4%.

Retail sales in China grew 7.2% vs. 7.9% consensus.

Japan GDP

Japan is important for investors as the Japanese economy is still the third largest economy in the world.  Japan’s GDP grew by 0.2% in line with the consensus.  However looking below the surface the data is weak.

Producer Price Index

Core PPI came at 0.3% vs. 0.2% consensus.  Investors should look at core PPI instead of headline PPI because the headline PPI contains a lot of noise and hinders good analysis.

Initial Jobless Claims

Initial Jobless Claims came at 225K vs. 214K consensus.  Higher claims at this time are not of concern.  However if it becomes a trend it will become a big concern.  This is a leading indicator and carries heavy weight in our models.

Trade Concerns

There are concerns that China thinks it has an advantage over the U. S. and is balking at concessions.

Momo Crowd And Smart Money In Stocks

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

Gold

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

For longer term, please see gold and silver ratings.

Oil

API data showed a surprise.  There was a draw of 500K barrels vs. consensus of a build of 1.65M barrels.  Oil is being bought on the data.  The momo crowd is aggressively buying oil.  Smart money is inactive.

EIA data will be released later today and may move the market.

For longer term, please see oil ratings.

Marijuana

CGC reported bad earnings.  This is putting pressure on marijuana stocks.

The momo crowd is selling 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 it can swing positive based on trade related rumors or news.  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 down and bonds are ticking up.

The dollar is weak.

Gold futures are at $1469, silver futures are at $16.96, and oil futures are $57.50.

S&P 500 resistance levels are  3100 and 3125; support levels are 3050, 3020 and 2950.

DJIA futures are down 41 points.

INFLATION IN LINE, POWELL SPEECH AHEAD, OVERBOUGHT MARKET LOOKING FOR EXCUSES

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

Inflation In Line

Core CPI came at 0.2% vs. 0.2% consensus.

Note that inflation is beginning to run higher than the Fed’s target.  This will make it difficult for the Fed to lower interest rates further.

Powell Speech Ahead

Powell speech in front of Congress is ahead.  The consensus is that Powell will say nothing new.  However you never know. We will be keeping a close eye for you.

Overbought Market

The stock market is overbought in the very short term.  It is looking for excuses to pullback.  The pullback is likely unless  there is news or if performance chase starts. (Please see yesterday’s Morning Capsule.)

Momo Crowd And Smart Money In Stocks

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

Gold

There have been two attempts to break $1450 psychological support. Both times bulls came charging to buy.  The momo crowd is aggressively buying gold as of this writing.  Smart money is inactive.

For longer term, please see gold and silver ratings.

Oil

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

For longer term, please see oil ratings.

Marijuana

CRON and TLRY earnings have been poor.  The momo crowd is selling 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.  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 down and bonds are ticking up.

Currencies are mixed.

Gold futures are at $1463, silver futures are at $16.85, and oil futures are $56.38.

S&P 500 resistance levels are  3100 and 3125; support levels are 3050, 3020 and 2950.

DJIA futures are down 93 points.

RED ALERT AS TRUMP MAY TRIGGER SOME MONEY MANAGERS TO BEHAVE RECKLESSLY

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

Trump’s Speech

The highlight of the day is Trump’s speech at New York Economic Club.  Reports about the text of the speech show nothing new. However Trump improvises and may move the markets.

Red Alert

Two potential scenarios are developing. Both of them should be considered ‘red alerts’ by prudent investors. Let’s explore with the help of a chart.

The Chart

Please click here for an annotated chart of S&P 500 ETF (SPY). Similar conclusions can be drawn from charts of Dow Jones Industrial Average (DJIA) and Nasdaq 100 ETF (QQQ). I get many requests to publish charts of Dow Jones Industrial Average as this is the most popular index. Investors ought to look at S&P 500 (SPX) chart because a large amount of money is tied to S&P 500 and not much money is tied to Dow Jones Industrial Average. Those with portfolios heavy in technology may consider looking at a chart of Nasdaq 100 ETF QQQ.

Note the following:

  • The chart shows that the stock market has experienced a strong rally.
  • The chart shows that the price action in the stock market after the breakout is subdued. This is a negative for the stock market.
  • The chart shows that the top trendline is nearby indicting a potential resistance zone. This is a negative.
  • RSI shows that the market is overbought. This is a negative.
  • The chart shows that the volume is low. This is a negative.
  • The chart shows that if there is a breakout above the top trendline, the stock market may experience a significant acceleration to the upside. This is a positive.
  • Stocks of popular large-cap stocks such as Amazon (AMZN), Apple (AAPL) and Facebook (FB) are seeing strong momo (momentum) crowd money flows. This is a positive in the very short term.
  • Going into the launch of its new streaming service, Disney (DIS) stock is seeing very strong momo crowd and smart money flows. This is a positive indicator in the very short term.
  • Semiconductor stocks are often early indicators. Momo crowd money flows in popular semiconductor stocks such as Intel (INTC), AMD (AMD), Applied Materials (AMAT) and Nvidia (NVDA) are very positive. This is a positive indicator in the very short term.

Two Scenarios

Either one of these two scenarios is a potential red alert.

  • We are approaching the year end. It appears that a large number of money managers are lagging behind their benchmarks. Time is running out for them to catch up. We already know that Trump excels at moving the markets.  Trump is capable of making statements that may run the market higher. If the market runs higher and breaks the top trendline shown on the chart, the pattern will be set for a significant acceleration to the upside. Many lagging money managers will throw caution to the wind adding fuel to the fire by buying the strongest stocks in the strongest sectors to catch up.Such behavior is certainly reckless but that is exactly what happens. You may be asking, “Why are you calling it a red alert, this is a very positive scenario?” The reason I am calling it a red alert is that such a scenario may lead to a blow off top followed by a significant decline.
  • If it was not for the year end, lagging money managers and Trump’s skill to run up the stock market, the pattern shown on the chart is set up for a pullback.   If a significant pullback occurs, money managers with significant gains may want to lock in those gains by selling or hedging. This may put additional pressure to the downside.

What Does It All Mean?

A big part of The Arora Report success has been due to doing scenarios analysis in advance and using probabilities to make the decisions.

Investors ought to start with Arora’s Second Law of Investing and Trading; No one knows with certainty what is going to happen next. The only realistic thing investors can do is to analyze various scenarios in advance and use probabilities to make their decisions.

The probability of the first scenario is about 20 points higher than the probability of the second scenario. This should guide investors in terms of cash, hedges and which positions to hold.

Momo Crowd And Smart Money In Stocks

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

Gold

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

For longer term, please see gold and silver ratings.

Oil

The momo crowd is buying oil.  Smart money is inactive.

For longer term, please see oil ratings.

Marijuana

The momo crowd is selling 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 can easily move either way depending upon rumors and Trump’s speech.  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, bonds and currencies are range bound.

Gold futures are at $1451, silver futures are at $16.73, and oil futures are $57.10.

S&P 500 resistance levels are  3100 and 3125; support levels are 3050, 3020 and 2950.

DJIA futures are up 24points.

LOW LIQUIDITY BECAUSE OF VETERAN’S DAY, EXCUSES TO SELL THE OVERBOUGHT MARKET

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

Low Liquidity

Today is Veteran’s Day. Please join us in thanking veterans who have served to protect the freedom for all of us.

The bond market and banks are closed.

The stock market is open but expect lower liquidity.  On lower  liquidity days it is easier for the market and especially for individual stocks to be pushed around.

Excuses To Sell The Overbought Market

The stock market is overbought in the very short term.  Overbought markets are vulnerable to the down side.  Often excuses are found to sell the markets.  This morning there are two excuses.

  • Over the weekend Trump said he had not decided on tariff rollbacks.
  • Violence in Hong Kong.

Momo Crowd And Smart Money In Stocks

The momo crowd is selling stocks as the momentum stalls.  Smart money is inactive.

Gold

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

For longer term, please see gold and silver ratings.

Oil

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

For longer term, please see oil ratings.

Marijuana

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.  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.

The bond market is closed.

The dollar is weaker.

Gold futures are at $1462, silver futures are at $16.81, and oil futures are $56.73.

S&P 500 resistance levels are  3100 and 3125; support levels are 3050, 3020 and 2950.

DJIA futures are down 110 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 22% – 32% and short to medium-term hedges of  5% – 15% and short term hedges of 5% – 15%.

 

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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