WEEKLY MARKET DIGEST: MOMO HEAVILY BUYS STOCKS, GOLD AND OIL BUT SMART MONEY NOT BUYING $DIA $GLD $QQQ $SLV $SPY $TBF $TBT $USO

WEEKLY MARKET DIGEST: MOMO HEAVILY BUYS STOCKS, GOLD AND OIL BUT SMART MONEY NOT BUYING $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.

NEW WEAK HOUSING DATA IN RED HOT HOUSING MARKET, NEW TRUMP REBUKE, RUSSIA CUTS INTEREST RATES; MOMO BUYING STOCKS, GOLD AND OIL

This is what you need to know today.

New Weak Housing Data In Red Hot Housing Market

The housing market has been red hot. The new data just released is unexpectedly weak.  Housing Starts came at 1092K vs. 1227K consensus.  Building permits are a leading indicator. Building permits are the first step to building houses.  Lately even when housing starts have been weaker, building permits have been strong.

The stock market is caught up in the momentum and seems to be oblivious of the real data.

New Trump Rebuke

The Senate in a 98-2 vote passed a bill for stiffer sanctions on Russia.  This is being seen as a rebuke to Trump.

Russia Cuts Interest Rates

Russian central bank unexpectedly cut interest rates.  Russia is possibly doing this to counter weaker oil.

Momo Buys, Stocks, Gold And Oil

The momo crowd is aggressively buying stocks, gold and oil.

There is no buying by the ‘smart money.’

Technical Patterns

Previously we shared with you that we keep a close eye on Australia because it is an indication of commodities, especially commodity demand in China.

Previously we also shared with you a bearish technical signal on Australia.  Now the bearish signal has progressed to an Island Top.  ETF of interest is .

This is powerful information and many investors use this to enter trades in addition to our official signals.  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.

Dollar is slightly stronger.

Interest rates and bonds are range bound.

Gold futures are at $1257, silver futures are at $16.73, and oil futures are $45.03.

S&P 500 resistance levels are 2450 and 2500; support levels are 2425, 2400, and 2363.

DJIA futures are down 12  points.

END OF EASY MONEY, OBSTRUCTION OF JUSTICE PROBE AGAINST TRUMP, JUNIOR GOLD MINER MOMO CRUSHED, OIL UNDER $45

This is what you need to know today.

End Of Easy Money

The Fed has laid out in much greater detail than expected its plan to reduce its $4.5 trillion balance sheet.

We will be carefully watching over the coming weeks to see how the ‘smart money’ reacts to the end of easy money.

Obstruction Of Justice

It is confirmed that the special counsel is investigating obstruction of justice charges against Trump.

This is giving the market pause as it may distract from Trump’s agenda.

Emerging Markets

Emerging markets are under pressure on the end of easy money.  ETF of interest is .  High profile markets such as Hong Kong () and Korea () are being aggressively sold.

Good Economic Data

Before release of new economic data at 8:30 am ET, it was looking like the market was about to take  a deep dive.  The new economic data is very positive.  This is helping to reduce the pressure on the market.

Weekly Jobless Claims came at 237K vs. 241K consensus.  The lower the number, the stronger the economy.

Philly Fed came at 27.6 vs. 24.9 consensus.  The higher the number, the stronger the economy.

Empire Manufacturing came at 19.8 vs. 6.0 consensus.  The higher the number, the stronger the economy.

Gold And Junior Gold Miners Crushed

In the Morning Capsule on Tuesday the 13th we pointed out to you the following;

New Irrationality In Precious Metals

The momo crowd is not known for rationality but the behavior happening right now is odd even for the momo crowd.

The momo  crowd is aggressively buying gold but aggressively selling silver.

The momo crowd is aggressively buying junior minors but aggressive selling major precious metal minors.

Historically, silver and junior minors are high beta and they tend to move together.  High beta simply means that they move a lot more than gold.

Yesterday junior gold miners were crushed.  The favorite of the momo crowd is to trade fell from a high of $21.80 to a low of $16.76, a 23% drop in one day.

Gold is under pressure.  Please see our prior posts regarding downgrade on gold rating prior to the fall and timely information on the smart money selling gold.

Oil

Oil fell after EIA data showed crude, gasoline and distillate builds higher than the consensus.

Technical Patterns

Several Australian shares are tracing an Exhaustion Bar.  This is bearish.  ETF of interest is .

We pay special attention to Australia because it is a proxy for commodities and commodity demand in China.

This is powerful information and many investors use this to enter trades in addition to our official signals.  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.

Dollar is stronger.

Interest rates are ticking up and bonds are ticking down.

Gold futures are at $1254, silver futures are at $16.65, and oil futures are $44.50.

S&P 500 resistance levels are 2425, 2450 and 2500; support levels are 2400, 2363, and 2334.

DJIA futures are down 77 points.

DANGEROUS SPECULATION ON SHOOTING, THE FED DAY, NEW WEAK ECONOMIC DATA, SHORT SQUEEZE IN GOLD, OIL ON API

This is what you need to know today.

Dangerous Speculation On Shooting

Steve Scalise, a top House Republican,  has been wounded as shots were fired during a baseball practice.

Futures were running up  ahead of the shooting.  First futures did not care about the shooting.  Then speculation started that Republicans were specifically targeted.  So far we have not seen any confirmation of this.  Mainstream media is shying away from such speculation for good reason.  However as investors, we need to be alert.  If the speculation turns out to be true, this may adversely affect the current stock rally.

The Fed Day

The Fed will announce its decision at 2:00 pm ET.  As we shared with you yesterday, there is 95% probability for a rate hike.

New Weak Economic Data

Retail Sales Ex-auto came at -0.3% vs. +0.2% consensus.  Retail Sales are very important because 70% of the U. S. economy is consumer based. We exclude autos because data on autos is very noisy and it makes it difficult to make timing predictions.  Please click here to see how we filter out the noise.

Core Consumer Price Index (CPI)  came at +0.1% vs. +0.2% consensus.

Short Squeeze In Gold

A massive short squeeze in gold and silver is underway.  This is a common occurrence ahead of a Fed announcement.

Oil On API

API inventories came a +2.75 million vs. consensus of -2.5 million barrels.  Oil first fell on the news.  New buying is coming in before release of the EIA data.  EIA data will be released at 10:30 am ET.

Especially noteworthy is that gasoline inventories came at +1.794 million barrels vs. a consensus of -1.15 million barrels.

Technical Patterns

Several large Canadian stocks are tracing a Hanging Man.  This is bearish.  ETF of interest is .

This is powerful information and many investors use this to enter trades in addition to our official signals.  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.

Dollar is weaker.

Gold futures are at $1280, silver futures are at $17.23, and oil futures are $46.22.

S&P 500 resistance levels are 2450 and 2500; support levels are 2425, 2400, and 2363.

DJIA futures are up 30 points.

SHIFT TO FED FROM TECH, NEW IRRATIONALITY IN PRECIOUS METALS, HOTTER INFLATION, DEATH CROSS IN OIL

This is what you need to know today.

Attention Shifts To Fed From Tech

Over the last two trading days the market has been focused on tech, today attention is shifting from tech to the Fed.  The Fed is starting its two day meeting.  There is 95% probability of a rate hike.  The rate hike is already discounted in the market.  The surprise will be if there is no rate hike.  We will also be carefully reading the tea leaves for the future direction of the rates.  The decision will be announced tomorrow.

You will see posts on the Real Time Feeds if an action needs to be taken.

New Irrationality In Precious Metals

The momo crowd is not known for rationality but the behavior happening right now is odd even for the momo crowd.

The momo  crowd is aggressively buying gold but aggressively selling silver.

The momo crowd is aggressively buying junior minors but aggressive selling major precious metal minors.

Historically, silver and junior minors are high beta and they tend to move together.  High beta simply means that they move a lot more than gold.

Hotter Inflation

Core Producer Price Index came at 0.3% vs. 0.2% consensus.  We give heavier weight to Core PPI in our models.  The reason is that inflation often shows up at producer level before it shows up at consumer level.

Death Cross In Oil

A death cross is developing in Brent crude oil.  Brent crude is a standard in Europe.

Golden cross and death cross are technical signals when certain moving averages cross each other.   These are often false signals and you will lose money if you trade based on them over a long period over a large number of trades.  However since so many traders trade on them, we do pay attention.

Technical Patterns

Several consumer discretionary stocks are tracing an Inside Bar.  This is bullish.  ETF of choice is .

This is powerful information and many investors use this to enter trades in addition to our official signals.  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.

Interest rates are ticking up and bonds are ticking down.

Currencies are range bound.

Gold futures are at $1263, silver futures are at $16.76, and oil futures are $45.90.

S&P 500 resistance levels are 2450 and 2500; support levels are 2425, 2400, and 2363.

DJIA futures are up 34  points.

MOMO HEAVILY BUYS TECH BUT NO BUYING BY SMART MONEY, BENEFITS OF DIVERSIFICATION ON DISPLAY, FRENCH ELECTION, GOLD AND OIL LISTLESS

This is what you need to know today.

Big Tech

After a bloodbath in big tech on Friday, tech selloff spread to Asia and Europe.  The selloff continued in the early morning in the U. S.   Around 8:15 am, momo crowd started buying tech.  Since then momo has been aggressive buyer. There is no buying by the ‘smart money.’

Expect a lot of volatility with several twists and turns in tech stocks today.

Benefits Of Diversification On Display

We always urge our subscribers to diversify.  On Friday when a bloodbath was taking place in big tech, bank stocks were going higher.

French Election

Over the weekend, in the election for the lower house of Parliament, France’s old political guard was routed.  The party of President Macron did well.  France is about to undergo sweeping reforms.

We are likely to issue a buy signal on France. 

Gold And Oil Listless

Gold and oil are listless.  There are both bullish and bearish cross-currents.  Traders and machines are waiting for both oil and gold to pick a direction and then they are likely to jump on exaggerating the move.

Technical Patterns

Several utility stocks have traced a Hammer.  This is bullish.  ETF of interest is .

This is powerful information and many investors use this to enter trades in addition to our official signals.  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 up and bonds are ticking down.

Currencies are range bound.

Gold futures are at $1266, silver futures are at $17.02, and oil futures are $46.53.

S&P 500 resistance levels are 2425, 2450 and 2500; support levels are 2400, 2363, and 2334.

DJIA futures are down 27 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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