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 CROWDS’ STOPS HUNTED AND DESTROYED, GOLD RUNS ON GDP
This is what you need to know today.
Momo Crowds’ Stops Hunted And Destroyed
We typically inform you when hunt and destroy algorithms become especially active. The momo crowd has been thinking that this market is giving them a free lunch. They buy irrespective of the fundamentals based only on the momentum and think that their stops would protect them. Yesterday their stops got hunted by algos exasperating the move down in popular tech and biotech stocks.
GDP
GDP-Advanced came at 2.6% vs. 2.8% consensus. Overall the number is good but being sub-par compared to the consensus is causing several movements in various markets.
Gold Moves On GDP
Gold jumped on sub-par GDP. A short squeeze in gold is starting.
Oil
Oil continues its march up.
Pakistan
Pakistan’s Supreme Court has disqualified the prime minister from serving based on corruption charges stemming out of Panama papers. We have previously written about Panama papers. This may affect other countries after Pakistan’s example.
Technical Patterns
An Outside Day is being traced in several popular technology and biotechnology stocks. This is bearish. ETF of interest is QQQ
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.
Interest rates are ticking down and bonds are ticking up.
Dollar is getting weaker.
Gold futures are at $1270, silver futures are at $16.65, and oil futures are $49.17.
S&P 500 resistance level is 2500; support levels are 2450, 2425, and 2400.
DJIA futures are down 39 points.
MARKETS BLIND TO CHANGE IN FED STATEMENT, IMPORTANT INFO ON GOLD, DURABLE GOODS ORDERS UNEXPECTEDLY EASE
This is what you need to know today.
Markets Blind To The Change In The Fed Statement
On the surface, the Fed statement appears in line with the consensus. Based on that appearance there was no good reason for gold and bonds to spike up, and dollar to fall on the statement.
Now we have dug into the statement carefully. The Fed is always very careful in choosing their words. The Fed spends a considerable amount of time in deliberation in picking every word in the statement.
The interpretation of the prior statement was that the Fed would start unwinding its balance sheet in about a year. The new statement contains the words, “Relatively soon.” The word ‘relative’ is in comparison to the prior statement. In plain English, it means that the Fed is not going to wait a year but likely to start unwinding much sooner. This is more hawkish than the consensus. The correct course of action is for gold to go down, bonds to go down and dollar to get stronger. So far markets are blind. Let us see if some Wall Street banks catch on and start hammering the point in the media.
Important Info On Gold
Please carefully read the section above.
In reality, the Fed statement was bearish for gold. The momo crowd, not known for good analysis, continues to buy gold on the Fed statement. The ‘smart money’ is selling into the strength.
Durable Goods Orders Ease
Durable Goods Ex-transports came at 0.2% vs. 0.4% consensus. This weakness is unexpected. However this is a very volatile series and we are not concerned about this at this time.
Weekly Unemployment Claims
Weekly Unemployment Claims is a leading indicator and carries a heavy weight in our model. The number came at 244K vs. 240K consensus.
Oil
Oil continues its upward momentum. The momo crowd is aggressively buying. The 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 expect the market to open higher.
Interest rates have ticked down and bonds have ticked up but this may reverse.
Dollar is weaker but this may also reverse.
Gold futures are at $1263, silver futures are at $16.77, and oil futures are $48.46.
S&P 500 resistance level is 2500; support levels are 2450, 2425, and 2400.
DJIA futures are up 30 points.
ALL EYES ON THE FED, SMART MONEY SELLS GOLD, OIL FLIES ON BLOWOUT API
This is what you need to know today.
All Eyes On The Fed
The Fed will issue its policy statement at 2:00pm ET. Our expectation is that rates will be unchanged. We will be carefully watching for clues about unwinding the massive $4.5 trillion balance sheet.
Gold On The Fed Day
The technical set up on gold is negative. The ‘smart money’ is selling. If it was any day other than the Fed day, our very, very short-term rating on gold and silver would have turned negative. However historically on the Fed day, momo crowd often buys aggressively. For this reason, we are not changing the rating at this time.
An updated post on money flows and probabilities of various support resistance levels was published earlier at the appropriate services at The Arora Report.
Oil Moves On Blowout API Data
API inventory data came at a draw of 10.23 million barrels vs. consensus of a draw of 2.5 million barrels.
Oil is flying. Brent crude is now over $50.
Technical Patterns
Hong Kong stocks are tracing an Engulfing Line. This is bearish. ETF of interest is FXI.
Healthcare stocks are tracing an Engulfing Line. This is bearish. ETF of interest is XLV.
Retail stocks are tracing a Diamond Bottom. This is bullish. ETF of interest is XRT.
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.
Interest rates, bonds and currencies are range bound.
Gold futures are at $1247, silver futures are at $16.42, and oil futures are $48.37.
S&P 500 resistance level is 2500; support levels are 2450, 2425, and 2400.
DJIA futures are up 91 points.
FED MEETING, HEALTHCARE DEBATE, GOLD FALLS ON RISE IN CONFIDENCE IN EUROPE, OIL ON SAUDI REPORT
This is what you need to know today.
Fed Meeting
Fed meeting starts today. We will be looking for details of balance sheet reduction. We do not expect a rate hike but you never know.
Healthcare Debate
Trump has pushed Senate Republicans to start the healthcare debate. The outcome is uncertain.
Europe Confidence
German IFO business climate index increased to 116, this is a record high. In France, confidence increased to the highest level in six months.
Euro is encouraged on the confidence data.
Gold Sold On Confidence Data
The ‘smart money’ is lightly selling gold on the confidence data. Momo crowd continues to buy as it historically does on the Fed meeting.
Oil Running
Yesterday we wrote,
The reason is a report that Saudi plans deep export cuts to the U. S. in August.
As more investors find out about the report, oil is being aggressively bought.
Technical Patterns
Several bank stocks are tracing an Inside Bar. This is bullish. ETF of interest is KBE.
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.
Gold futures are at $1251, silver futures are at $16.50, and oil futures are $47.31.
S&P 500 resistance level is 2500; support levels are 2450, 2425, and 2400.
DJIA futures are up 116 points.
DOLLAR BEARS ROAR PRECISELY WHEN THE NEW DATA TURNS IN FAVOR OF THE DOLLAR, SAUDI OIL EXPORT CUT, STOCKS AND GOLD SUPPORTED
This is what you need to know today.
Dollar Bears Roar
According to the latest CFTC report, net short positions of speculators have risen to the highest level since 2013.
Europe Growth
Dollar has been weakening in big part because euro has been very strong. Recent economic data from Europe has been extraordinarily good. However this is not the case today. As our long time subscribers know, we focus on leading indicators. This in part has contributed to our unrivaled performance.
A leading indicator is Purchasing Managers’ Index (PMI). PMI in Europe fell to 55.8 vs. 56.2 consensus. This is the weakest in six months. So far, dollar bears are oblivious as they are still focused on the lagging indicators.
Gold Oblivious To New Data
The momo crowd is aggressively buying gold this morning. The momo crowd is driven by two factors in gold today.
- Momentum from last week.
- Testimonies in front of the Congress of Trump’s son-in-law, Kushner, and Trump Jr.
The data from Europe this morning is negative for gold but momo crowd is oblivious. Typically, the ‘smart money’ sells into strength in gold when the momo crowd is oblivious to the new data. However the smart money is inactive so far.
Oil Supported By Saudi Export Cut
The momo crowd is aggressively buy oil. The reason is a report that Saudi plans deep export cuts to the U. S. in August.
OPEC and Russia are meeting. In our analysis nothing significant is likely to come out of the meeting.
Momo Buying Stocks
The momo is aggressively buying stocks. This morning there is speculation that mom and pop have been sending lots of money to mutual funds and there are significant orders from mom and pop to buy popular stocks when the market opens.
The smart money appears to be selling into the strength.
Technical Patterns
Many junior gold miner stocks are tracing a Hanging Man. This is bearish. ETF of interest is GDXJ.
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.
Interest rates are ticking down and bonds are ticking up.
Gold futures are at $1257, silver futures are at $16.55, and oil futures are $46.18.
S&P 500 resistance level is 2500; support levels are 2450, 2425, and 2400.
DJIA futures are down 11 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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