WEEKLY MARKET DIGEST: OPTIMISM OVER JOBS REPORT, SOARING EUROPEAN BANKS, JAPAN GDP AND CHINA TRADE $GLD $QQQ $SLV $SPY $TBF $USO $BTC.X

WEEKLY MARKET DIGEST: OPTIMISM OVER JOBS REPORT, SOARING EUROPEAN BANKS, JAPAN GDP AND CHINA TRADE $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.

OPTIMISM OVER JOBS REPORT, SOARING EUROPEAN BANKS, JAPAN GDP AND CHINA TRADE

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

Stocks

Significant optimism has come back in stocks.  The momo crowd is buying aggressively. The smart money is buying lightly in early trade.

Blowout Jobs Report

Non-farm Private Payrolls came at 221K vs. 170K consensus.

European Banks Soar

Stoxx 600 Banks Index soared by as much as 3%.  Basel III Capital  will see  no significant increase.  This is a big positive.

As a full disclosure ZYX Global has a position in European financial ETF EUFN and ZYX Buy has a position is HSBC.

Japan GDP

Japan’s GDP was unexpectedly revised to 2.6% vs. 1.4% consensus.

China Trade

Chinese exports rose 12.3% in dollar terms vs. 5.3% consensus.

Gold

The momo crowd continues to aggressively sell gold.  Money is also moving out of gold and into bitcoin.

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.

Oil is seeing significant buying.

Currencies, interest rates and bonds are range bound.

Gold futures are at $1250, silver futures are at $15.80, and oil futures are $57.72.

S&P 500 resistance levels are 2661 and 2688; support levels are 2631, 2615 and 2594.

DJIA futures are up 72   points.

THE PATTERN OF POSITIVE SEASONALITY AFTER A PAUSE IS STILL INTACT, TECHNOLOGY ROUT IN ASIA STOPS, MOMO SELLING GOLD

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

Positive Seasonality After A Pause

Historically in a strong year, stocks pause about this time in December and then start a run near the year end.  So far this pattern is intact.  However this year the tax reform is causing extra complications.  Investors ought to keep a close eye on House and Senate conference to finalize the tax bill.

Technology Rout In Asia Stops

Finally technology rout in Asia has stopped.  It will be interesting to see if that is carried to the U. S.

Gold

The momo crowd is aggressively selling gold after it broke through a popular moving average as we shared with you in yesterday’s Morning Capsule.

Brazil

In early trade, Brazil stocks are being aggressively sold

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.

Dollar is stronger.

Oil, interest rates, and bonds are range bound.

Gold futures are at $1254, silver futures are at $15.85, and oil futures are $56.21.

S&P 500 resistance levels are 2631, 2661 and 2688; support levels are 2615, 2594, and 2550.

DJIA futures are down 79  points.

CONCERN OVER TRUMP RED LINE BEING CROSSED IS DAMPENING THE SENTIMENT

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

Trump’s Red Line

In yesterday’s Morning Capsule, when nobody was talking about it, we wrote:

One of the biggest dangers for this stock market is if Trump gets implicated in the Russia investigation or Trump fires special prosecutor Robert Mueller.

Trump has previously drawn a red line against the prosecutor meddling in his personal affairs.

Deutsche Bank (DB) is Trump’s largest lender.  Deutsche Bank also has extensive dealings with Russia.

Yesterday the market was ignoring it but today it is dampening the sentiment.

Selloff In Asia

Stocks in Japan lost 2%, in Hong Kong 2.1%, in Shanghai 0.3% and in India 0.6%.

Reserve Bank of India left interest rates unchanged.

Prudence

Please pay attention to What To Do Now section below.

Prudence requires that stock bulls ought to take protective measures while continuing to hold good positions as Trump’s red line may have been crossed. For investors it is important to look at the issue of Trump’s red line in the context of the technical position of the market at this time. For this reason, let us first look at two charts, one short-term and one long-term, and then we will discuss the details of Trump’s red line.

Two Charts

Please click here for an annotated chart of technology ETF (XLK). The reason it is important to pay attention to this ETF in addition to broad based ETFs such as S&P 500 ETF (SPY), small cap ETF (IWM) and Dow Jones Industrial Average (DJIA) is because it carries heavy weight of stocks that are now popular among investors. Some of this ETF’s holdings are Apple (AAPL), Facebook (FB), Google (GOOG) (GOOGL), Nvidia (NVDA), Micron (MU), PayPal (PYPL) and AMD (AMD).   Please note the following from the chart:

  • Volume was low during the rally phase in recent days.
  • Volume spiked up on the first big down day.
  • Volume has stayed higher since the first down day.

The foregoing has negative implications.

Please click here for an annotated long-term chart of Nasdaq 100 (QQQ). For the sake of complete transparency, this is exactly the same chart without any changes that was published in some of our services.

Trump’s Red Line

Deutsche Bank previously paid $670 million in fines, a large amount, for irregularities about Russian money laundering totally $10 billion.

Paul Manafort is a former chairman of Trump’s campaign. Mueller has indicted Manafort. Manafort is accused of laundering money for Russian clients.

There are also reports that Deutsche Bank gave $287 million loan to Trump’s son-in-law Jarad Kushner.

There are reports that Mueller has issued a subpoena to Deutsche Bank to force it to disclose documents regarding Trump and his family. There is also a denial of these reports.

We will have to wait and see how Trump reacts.

Gold

The smart money is lightly buying gold on Trump concerns.  The momo crowd is selling gold  on crossing of a popular moving average .

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 $1267, silver futures are at $16.08, and oil futures are $56.94.

S&P 500 resistance levels are 2631, 2661 and 2688; support levels are 2615, 2594, and 2550.

DJIA futures are down 20  points.

STOCKS MIXED AFTER A SPOT ON CALL, TRUMP BANK RECORDS SUBPOENAED BUT MOMO CROWD OBLIVIOUS

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

Stocks Mixed

In yesterday’s Morning Capsule we wrote,

Momo  Aggressively Buys But Smart Money Takes Profits

The momo crowd is excited about the Senate passing the tax bill.  In early trade, momo crowd has been aggressive buyers of U. S. stocks.  The momo pushed U. S. stocks equivalent of over 250 points in DJIA.  When the DJIA futures went over 24490, the ‘smart money’ stepped in to sell.

That early call was proven spot on during the day.  Nasdaq 100 index ended strongly down. S&P 500 after opening up very strong, ended down negative.  DJIA which ran up 300 points on the open, gave up most of its gains during the day.

This morning, early indicators are mixed.  The momo crowd continues to sell tech stocks.  The momo crowd is aggressively buying financials and industrials.

The ‘smart money’ is mostly inactive but appears to be lightly nibbling  tech stocks on down spikes.

Trump Bank Records Subpoenaed But Momo Crowd Oblivious

There is a new dangerous development that prudent investors should pay attention to but the momo crowd is oblivious.

One of the biggest dangers for this stock market is if Trump gets implicated in the Russia investigation or Trump fires special prosecutor Robert Mueller.

Trump has previously drawn a red line against the prosecutor meddling in his personal affairs.

Deutsche Bank is Trump’s largest lender.  Deutsche Bank also has extensive dealings with Russia.  Mueller has issued a subpoena to Deutsche Bank to force it to disclose documents regarding Trump and his family.

We will have to wait and see how Trump reacts.

Gold

The momo crowd is lightly selling gold.  The smart money is inactive.

Natural Gas And Oil

Natural gas is being aggressively sold but it is technically oversold.  This makes a good trade in natural gas difficult.

Momo crowd is lightly selling oil.  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 can easily swing either way.

Interest rates are ticking up and bonds are ticking down.

Euro is weaker.

Gold futures are at $1275, silver futures are at $16.28, and oil futures are $57.31.

S&P 500 resistance levels are 2661 and 2688; support levels are 2631, 2615, and 2594.

DJIA futures are up 40 points.

MOMO AGGRESSIVE BUYER OF STOCKS ON TAX REFORM BUT SMART MONEY SOLD WHEN DJIA WENT OVER 24490

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

Momo  Aggressively Buys But Smart Money Takes Profits

The momo crowd is excited about the Senate passing the tax bill.  In early trade, momo crowd has been aggressive buyers of U. S. stocks.  The momo pushed U. S. stocks equivalent of over 250 points in DJIA.  When the DJIA futures went over 24490, the ‘smart money’ stepped in to sell.

In our analysis, the smart money is not bearish on the market but simply taking advantage of the strength to book some profits perhaps with the intention of buying on a pullback.

Gold

Gold is under pressure as interest rates tick up, dollar rises and stocks rise.

Oil

The momo crowd is lightly selling oil.  It appears that the momo crowd is moving money into stocks from other assets.

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 but in view of smart money selling when DJIA went over 250 points in early trade, a reversal to the downside has a fair probability.

Gold futures are at $1276, silver futures are at $16.35, and oil futures are $57.81.

S&P 500 resistance levels are 2661 and 2688; support levels are 2631, 2615, and 2594.

DJIA futures are up 220 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 19% – 29% and short to medium-term hedges of  15% – 25% and very short term hedges of 15%.

 

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