WEEKLY MARKET DIGEST: NEW NEGATIVE RATE LOANS, CHINA TO HURT SILVER, ADVANCE DECLINE HITS ALL TIME HIGH $DIA $GLD $QQQ $SLV $SPY $TBF $TBT $USO

WEEKLY MARKET DIGEST: NEW NEGATIVE RATE LOANS IN JAPAN, CHINA MOVE TO HURT SILVER, ADVANCE DECLINE HITS ALL TIME HIGH $DIA $GLD $QQQ $SLV $SPY $TBF $TBT $USO $MSFT $SBUX $GOOG $V $CAT $GE

 

(The Weekly Digest reproduces the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers. ) 

JAPAN MAY START NEGATIVE INTEREST LOANS TO COMBAT NEGATIVE INTEREST DEPOSITS, CHINA MOVE MAY DAMPEN EXCESSIVE SILVER SPECULATION

This is what you need to know today.

The Big News

The big news is that Japan may introduce negative interest rate loans to combat undesirable effects of negative interest rate deposits. Further, in theory, negative interest loans will stimulate lending and increased lending should result in better economy.  After all, who would not want to borrow if they can pay back in full with a lesser amount.

China Silver Speculators

Many Chinese proclaim that Chinese are the best gamblers in the world.  The hard data on stock and commodity speculation supports this view.

Over the last few days, Chinese have developed a new penchant for gambling on commodities notably on rebar and silver.

Chinese government is moving to dampen such speculation.

The past track record of Chinese is that speculation accelerates after the first government move.  The reason is that government action makes headlines in the media.  The headlines serve to inform the speculators where big gambling is going on.  New speculators then jump on. Lets keep a close watch and see what happens.

Bad Earnings From Notable Company

Overall about 78% of companies reporting so far have reported earnings better than the consensus.  Yesterday after the market close and this morning have been an exception.  Earnings from notable companies like MSFT, GOOG, SBUX, V, CAT, and GE have been below expectations.

Markets

Both yen and euro are weaker against the dollar.

There has been a notable rise in the price of newly issued Argentinian bonds.

Interest rates are creeping higher and bonds are drifting lower.

Oil is holding on to its recent rally.  BHI rig count to be reported at 1:00 pm ET may be a market moving event.

Overnight silver saw aggressive buying by Chinese.  North American momo crowd continues to aggressively buy silver. The trigger seems to be several newsletters intensely promoting silver based on gold/silver ratio.  As we have explained previously, the whole premise behind present gold/silver ratio compared to historical gold/silver ratio is false.

Our very, very short-term early stock market indicator is neutral.

Gold futures are at $1247, silver futures are at $17.31, and oil futures are $43.75.

S&P 500 resistance levels are 2100, 2111 and 2132; support levels are 2063, 2038, and 2017.

2200 2150 2132 2111 2100 2063 2038 2017 2000 1962 1920 1909 1900 1860 1838 1800 1767 1732

DJIA futures are up 1 points.

What To Do Now?

It is important for investors to look ahead and not in the rear view mirror.

Consider continuing to hold existing positions. Based on individual risk preference, consider holding cash or treasury bills 30 – 42%, and short to medium-term hedges of  30%.

It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.  When adjusting hedge levels, consider adjusting partial stop quantities for stock positions (non ETF); consider using wider stops on remaining quantities and also allowing more room for high beta stocks.  High beta stocks are the ones that move more than the market.

A Reminder 

As our long time subscribers know well, that during the 2008 and early 2009 market crash, when stock market lost about 50%, subscribers to The Arora Report made money by the boat load.  For long only investors, this remarkable performance was achieved by using inverse ETFs.

Our models do not expect a repeat of 2008.  In the most likely worst case, there may be a garden variety bear market that typically occurred every 18 to 24 months prior to the recent six-year market run.

Individual Trades

Please click on Home on the left side of the Menu.  Scroll down on the Home Page for individual trades.

Click on the Search by Symbol/Tag on the right hand side and click on the symbols of interest.

ADVANCE DECLINE HITS NEW HIGH, DRAGHI PRESS CONFERENCE, SHORT SQUEEZE IN GOLD AND SILVER

This is what you need to know today.

Cumulative advance decline line in the U. S. stock market has hit a new decisive high.  Advance decline line often leads stock prices.

Short covering in stocks has yielded to real buying.  Even Smart Money is stepping up and lightly buying.

So far 78% of the companies reported have exceeded consensus estimates.

Before turning uber bullish on the U. S. stock market, the following points are worth remembering:

  • In the short-term, stock market is very overbought.
  • Companies are beating estimates that were significantly lowered in the first quarter of 2016.
  • Valuations are not attractive.
  • Seasonally weak May is ahead.

Markets are dynamic, nothing is cast in stone and investors need to stay flexible.  Having said that, there is no change in our plan described yesterday.

On the edges, the plan will be to take more profits on long positions going into the end of the month and plan on redeploying the cash on weakness in May; on the short side, the plan will be to add or establish new short positions going into the end of the month.

ECB left rates unchanged.  ECB is coming under criticism from Germany on negative interest rates.  It will be interesting to see how Draghi handles the issue in his press conference that is underway.

Short squeezes in gold, silver, copper and oil have taken another leg up.  Smart Money is lightly selling into this new up leg.

Interest rates are ticking up and bonds are falling.

Euro is very volatile as it reacts to ECB rate decision and Draghi’s comments in the press conference.

Our very, very short-term early stock market indicator is neutral.

Gold futures are at $1269, silver futures are at $17.61, and oil futures are $44.19.

S&P 500 resistance levels are 2111, 2132, and 2150; support levels are 2063, 2038, and 2017.

DJIA futures are down 13 points.

What To Do Now?

It is important for investors to look ahead and not in the rear view mirror.

Consider continuing to hold existing positions. Based on individual risk preference, consider holding cash or treasury bills 30 – 42%, and short to medium-term hedges of  30%.

It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.  When adjusting hedge levels, consider adjusting partial stop quantities for stock positions (non ETF); consider using wider stops on remaining quantities and also allowing more room for high beta stocks.  High beta stocks are the ones that move more than the market.

A Reminder 

As our long time subscribers know well, that during the 2008 and early 2009 market crash, when stock market lost about 50%, subscribers to The Arora Report made money by the boat load.  For long only investors, this remarkable performance was achieved by using inverse ETFs.

Our models do not expect a repeat of 2008.  In the most likely worst case, there may be a garden variety bear market that typically occurred every 18 to 24 months prior to the recent six-year market run.

Individual Trades

Please click on Home on the left side of the Menu.  Scroll down on the Home Page for individual trades.

Click on the Search by Symbol/Tag on the right hand side and click on the symbols of interest.

RESPITE FROM SHORT SQUEEZES IN OIL AND GOLD BUT NOT IN COPPER AND STOCKS, SEASONALLY WEAK MONTH AHEAD

This is what you need to know today.

After a violent short squeeze, there is a respite in both gold and oil.  However, short squeeze continues full steam ahead in silver and copper.  Short squeeze in stocks has slowed but has not ended.

It is of utmost importance to look ahead.  May is seasonally one of the weakest months of the year.  April is one of the strongest months of the year.  These seasonal patterns do not always work but they work often enough to warrant attention.

On the edges, the plan will be to take more profits on long positions going into the end of the month and plan on redeploying the cash on weakness in May; on the short side, the plan will be to add or establish new short positions going into the end of the month.

Interest rates, bonds and currencies are range bound.

Our very, very short-term early stock market indicator is neutral.

Gold futures are at $1252, silver futures are at $17.11, and oil futures are $41.76.

S&P 500 resistance levels are 2100, 2111, and 2132; support levels are 2063, 2038, and 2017.

DJIA futures are up 4 points.

What To Do Now?

It is important for investors to look ahead and not in the rear view mirror.

Consider continuing to hold existing positions. Based on individual risk preference, consider holding cash 30 – 42%, and short to medium-term hedges of  30%.

It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.  When adjusting hedge levels, consider adjusting partial stop quantities for stock positions (non ETF); consider using wider stops on remaining quantities and also allowing more room for high beta stocks.  High beta stocks are the ones that move more than the market.

A Reminder 

As our long time subscribers know well, that during the 2008 and early 2009 market crash, when stock market lost about 50%, subscribers to The Arora Report made money by the boat load.  For long only investors, this remarkable performance was achieved by using inverse ETFs.

Our models do not expect a repeat of 2008.  In the most likely worst case, there may be a garden variety bear market that typically occurred every 18 to 24 months prior to the recent six-year market run.

Individual Trades

Please click on Home on the left side of the Menu.  Scroll down on the Home Page for individual trades.

Click on the Search by Symbol/Tag on the right hand side and click on the symbols

A FED PRESIDENT SAYS RATE RISE MAY BE FASTER, SHORT SQUEEZES GALORE, WEAK HOUSING DATA

This is what you need to know today.

Rate Hikes

Boston Fed President, Rosengren, says that interest rate hikes are set to come more rapidly than investors currently expect.  Such a statement would normally push gold and silver down.  However nothing stands in the way of a short squeeze once it gathers steam.

Short Squeezes

Many short squeezes are underway, the most notable being in silver.  The short squeeze was engineered by hunting stops over $16.35.  Massive buying occurred when stops hit.  As silver rose, shorts were forced to cover adding more buying pressure.  Of course as usual, the momo crowd jumped on the momentum.  This morning upside momentum continues as technical investors jump in claiming a breakout.

At one point silver in Shanghai jumped 4.3% to 3595 yuan per kilogram, this translates to about $17.25 per ounce.

Short squeeze in silver lifted gold which is now undergoing its own short squeeze.

A massive short squeeze started in oil and stocks yesterday.  Smart investors correctly forecasted that Doha talks had a high probability of failure. They went short ahead of the talks.    Even smarter operators noticed the positioning on the short side and decided to start a short squeeze.  Once the short squeeze started, machines jumped on the long side.  Scenarios like the foregoing are common occurrences in the markets.  for this reason, even though our call was a high probability of Doha failure, we took only measured steps to protect the long portfolios and did not go short on oil or stocks.

Housing

In the U. S., Housing Data came weaker than expectations Housing Starts came at 1089K vs. 1170K.  Building Permits came a 1086K vs. 1200K.

Markets

Currencies, interest rates and bonds are range bound.

We have switched over to oil June contract as it offers the most liquidity.

Our very, very short-term early stock market indicator is neutral but expect the market to start the day out positive as short squeezes continue.

Gold futures are at $1252, silver futures are at $16.98, and oil futures are $41.26.

S&P 500 resistance levels are 2100, 2111 and 2132; support levels are 2063, 2038, and 2017.

DJIA futures are up 43 points.

What To Do Now?

It is important for investors to look ahead and not in the rear view mirror.

Consider continuing to hold existing positions. Based on individual risk preference, consider holding cash 30 – 42%, and short to medium-term hedges of  30%.

It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.  When adjusting hedge levels, consider adjusting partial stop quantities for stock positions (non ETF); consider using wider stops on remaining quantities and also allowing more room for high beta stocks.  High beta stocks are the ones that move more than the market.

A Reminder 

As our long time subscribers know well, that during the 2008 and early 2009 market crash, when stock market lost about 50%, subscribers to The Arora Report made money by the boat load.  For long only investors, this remarkable performance was achieved by using inverse ETFs.

Our models do not expect a repeat of 2008.  In the most likely worst case, there may be a garden variety bear market that typically occurred every 18 to 24 months prior to the recent six-year market run.

Individual Trades

Please click on Home on the left side of the Menu.  Scroll down on the Home Page for individual trades.

Click on the Search by Symbol/Tag on the right hand side and click on the symbols of interest.

DOHA FAILS AND BRAZIL IMPEACHMENT

This is what you need to know today.

Doha talks on oil failed as Saudi insisted on Iran joining  production freeze.  Iran is ramping up production after lifting of the sanctions and has no interest in a freeze in production.

Today is the perfect time to remind subscribers of Nigam’s second law of investing, “No one knows with certainty what is going to happen next.”

The consensus was that oil would open around $35 and then drift down towards $30 if Doha failed. The consensus has proven to be wrong at least for now.  Oil opened at $38.75 and has traded as high as $39.55.   Consensus predictions were for DJIA to open down 400 points if Doha talks failed.  DJIA is likely to open down less than 100 points.  Consensus prediction was that gold would open around  $1280.  Gold opened at $1236 and traded as low as $1231 and as high as $1243.

Commodity currencies are falling on failure of Doha meeting.  The Aussie, the loonie, the ringgit, and the ruble are all down over 0.5%.

Yen is rising as there was no support from G-20 meeting for intervention to weaken the yen.

In Brazil, President Rousseff, lost the vote in the lower house of the Parliament.  Now the matter will go to the Senate for a trial.  Real, Brazilian currency, has jumped over 1%.

Interest rates and bonds are range bound.

Our very, very short-term early stock market indicator is negative.

Gold futures are at $1242, silver futures are at $16.27, and oil futures are $36.67.

S&P 500 resistance levels are 2100, 2111 and 2132; support levels are 2063, 2038, and 2017.

DJIA futures are down 63 points.

What To Do Now?

It is important for investors to look ahead and not in the rear view mirror.

Consider continuing to hold existing positions. Based on individual risk preference, consider holding cash 30 – 42%, and short to medium-term hedges of  30%.

It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.  When adjusting hedge levels, consider adjusting partial stop quantities for stock positions (non ETF); consider using wider stops on remaining quantities and also allowing more room for high beta stocks.  High beta stocks are the ones that move more than the market.

A Reminder 

As our long time subscribers know well, that during the 2008 and early 2009 market crash, when stock market lost about 50%, subscribers to The Arora Report made money by the boat load.  For long only investors, this remarkable performance was achieved by using inverse ETFs.

Our models do not expect a repeat of 2008.  In the most likely worst case, there may be a garden variety bear market that typically occurred every 18 to 24 months prior to the recent six-year market run.

Individual Trades

Please click on Home on the left side of the Menu.  Scroll down on the Home Page for individual trades.

Click on the Search by Symbol/Tag on the right hand side and click on the symbols of interest.

 

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