WEEKLY MARKET DIGEST: TAX REFORM PUSH MAY OVERCOME SEASONAL WEAKNESS, SHORT VOLATILITY COWBOYS ARE BACK $DIA $GLD $QQQ $SLV $SPY $TBT $USO

WEEKLY MARKET DIGEST: NEW TAX REFORM PUSH MAY OVERCOME SEASONAL WEAKNESS, SHORT VOLATILITY COWBOYS ARE BACK $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 TAX REFORM PUSH MAY OVERCOME SEASONAL WEAKNESS, BULLISHNESS AHEAD OF YELLEN AND DRAGHI

This is what you need to know today.

New Tax Reform Push May Overcome Seasonal Weakness

Gary Cohn says that Trump will start a new push for tax reform by the year end.  If Trump’s push appears to succeed, the stock market has the potential to not only overcome the seasonal weakness for late August to October period but also to take another leg up.

Bullishness Ahead Of Yellen And Draghi

As of this writing, what Yellen and Draghi will say at Jackson Hole today is not known.  However bulls are out in full force aggressively buying in early trading.

Gold

Gold bulls anticipate good things for gold from Yellen and Draghi speeches.

Oil

So far the hurricane threat is not impacting oil prices.

Durable Goods

Durable Goods Ex-Transports came at 0.5% vs. 0.5% consensus.

Technical Patterns

Several transportation stocks are tracing a Descending Triangle.  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.  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 positive.

Interest rates, bonds and currencies are range bound.

Gold futures are at $1291, silver futures are at $16.98, and oil futures are $47.60.

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

DJIA futures are up 45  points.

 

UPWARD DRIFT AHEAD OF YELLEN AND DRAGHI, HURRICANE IMPACT ON OIL

This is what you need to know today.

Upward Drift

In early trading there is upward drift in stocks ahead of the main events tomorrow at Jackson Hole.  Yellen will speak at 10:00 am ET and Draghi will speak at 3:00 pm ET.

Both of these speeches are potentially market moving events.

Hurricane Impact On Oil

Tropical storm Harvey is likely to become a hurricane and hit Texas.  The Gulf Coast is home to 30 refineries with about one-third of the total U. S. capacity.  There is potential for floods and power failures.  There is also likely to be temporary reduction in oil imports due to the hurricane impact.

Gold Supported

Jackson Hole can potentially be a trigger for gold to break out of the technical resistance.  For this reason, there is significant buying in gold.  Please be aware that if Yellen or Draghi are hawkish, gold also has a significant down side risk because at this time there is not a low risk trade.

Jobless Claims

Weekly Jobless Claims came at 234K vs. 238K consensus.  Weekly jobless claims is a leading indicator and for this reason carries a heavy weight in our models.

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.

Interest rates, bonds and currencies are range bound.

Gold futures are at $1292, silver futures are at $16.96, and oil futures are $48.24.

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

DJIA futures are up 65 points.

SMART MONEY LIGHTLY SELLING OVER THE NEW TRUMP THREAT AND JACKSON HOLE, COWBOYS STILL BUYING

This is what you need to know today.

Jackson Hole

One of the most important central bank events every year is the symposium at Jackson Hole hosted by the Federal Reserve Bank Kansas City.  The symposium will take place August 24 – 26.  Both Yellen and Draghi will be speaking.

Just for your reference, long time Arora Report subscribers benefited significantly when we understood the effect of quantitative easing from  Jackson Hole before the Wall Street.

As has been the case over the years, we will be paying careful attention to Yellen and Draghi speeches to see if we can provide our subscribers an edge.

New Trump Threat

The new Trump threat is to shut down the government to gain financing for the Mexican wall through Congress.

Smart Money Lightly Selling Buy Cowboys Buying

The ‘smart money’ lightly sold into the strength generated by the cowboys yesterday.  The smart money continues to lightly sell in the early trade today.

Cowboys continue to buy in the early trade.  Our subscribers are familiar with behavior of the momo (momentum) crowd.  Cowboys are the momo crowd on steroids.  They are mesmerized by potential gains and are mostly oblivious to the risks.

Safe Havens Of Gold, Bonds And Yen

On concerns over the new Trump threat and Jackson Hole, the ‘smart money’ is lightly buying gold, bonds and yen.

The momo crowd is aggressively buying gold. Please keep in mind that heavy technical resistance is straight ahead for gold.

Oil

API data showed a draw of 3.595 million barrels in line with the consensus. However gasoline inventories rose to 1.402 million barrels, significantly more than the consensus.

EIA data that is considered more authoritative than the API data will be released at 10:30 am ET and is likely to be a oil moving event.

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.

Gold futures are at $1295, silver futures are at $17.04, and oil futures are $47.69.

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

DJIA futures are down 78  points.

SHORT VOLATILITY COWBOYS ARE BACK, WEAK HOUSING PRICES, BUYING IN STOCKS AND SELLING IN GOLD

This is what you need to know today.

Short Volatility Cowboys Are Back

In plain English, lately volatility goes up when stocks go down and vise versa.  2017 has been a year of extraordinary low volatility.  This is like picking pennies in front of a moving bulldozer.  It is a profitable strategy until one gets run over by the bulldozer.  Volatility rose after concerns about North Korea heightened.  Many short sellers lost their shirt.

So far this morning, we are seeing aggressive short selling of volatility.  Short volatility cowboys are back in force.  This selling is driving volatility lower.

When volatility becomes inexpensive, institutions can lower the risk in their portfolios by hedging through buying volatility.  The effect on  the market is that in the absence of institutional selling, market starts going up. 

Weak Housing Prices

Housing Prices Index came at 0.1% vs. 0.5% consensus.

Buying In Stocks And Selling In Gold

In the early morning trade, there is buying in stocks and selling in gold, bonds, yen and euro.  Market participants are seeing less need of safe havens like gold, bonds and yen and at least for the moment are willing to take more risk.

Oil

The momo crowd is aggressively buying oil in anticipation of a bullish API report that will be released at 4:30 pm ET.

Technical Patterns

Several large Chinese stocks  are tracing a Pennant.  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.  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 $1292, silver futures are at $17.06, and oil futures are $47.37.

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

DJIA futures are up 59 points.

 

THE HIGH TIME TO PLAN TO PROFIT FROM MARKET SEASONALITY, SPECULATIVE BETS ON GOLD

This is what you need to know today.

Profiting From Seasonality

Late August to October is historically a weak period in the market.  If history is any guide, many stocks and ETFs may come into buy zones during this period.  Even though the weak period is starting now, historically most of the weakness comes in the period of mid-September to late October.

After the weak seasonal period, historically the market rallies into the year-end and January.  Barring any change in the macro picture, if weakness occurs, the plan is to use the weakness to buy from the long side and buy-to-cover short positions to book profits.

In addition, late August to October is often a highly volatile period.  High volatility often provides excellent short-term trading opportunities.

Stay tuned.  Long term subscribers of The Arora Report have profited handsomely from both long-term investing opportunity and short-term trades that occur in this weak seasonality period.  The plan is to repeat the same performance.

Of course don’t forget that depending upon market conditions, from October to December period, we start accumulating positions for the January Effect and often take advantage of deep discounts in closed-end funds.  Both of these strategies have been highly profitable for our long term subscribers.

This year, issues related to Trump, are a complicating factor.  For this reason extra analysis will be needed on the part of The Arora Report and investors will need more self-discipline to follow the Trade Management Guidelines and our system.

Speculative Bets On Gold

According to CFTC data, net long positions in gold futures increased to 179,537 contracts from 138,566 contracts.  Speculative long positions in gold are rising.

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 start out negative.

Interest rates, bonds and currencies are range bound.

Gold futures are at $1293, silver futures are at $17.01, and oil futures are $48.56.

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

DJIA futures are  down 20  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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