WEEKLY MARKET DIGEST: PAY ATTENTION: STOCK MARKET SENTIMENT REACHES ‘VERY HIGH’ LEVEL $DIA $GLD $QQQ $SLV $SPY $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.

MOMO CROWD EXCITED ABOUT S&P 500 MOVE ABOVE 2900, INDIAN RUPEE FALLS, OFFICE CLOSED

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

S&P 500 Move Above 2900

The S&P 500 has moved above 2900.  This is exciting the momo crowd.  The momo crowd is now setting their sights on S&P 500 hitting 3000.  Sentiment remains very positive.  We discussed the impact of the very positive sentiment in yesterday’s Morning Capsule.

Momo Crowd And Smart Money In Stocks

The momo crowd continues to aggressively buy in the early trade.  The smart money is lightly selling into the strength.

Indian Rupee Falls

The Indian rupee fell to an all time low of 70.89 per U. S. dollar.  The reasons behind the move are the following:

  • The Reserve Bank of India’s failure to raise interest rates.
  • The rise in oil prices.  India is a big oil importer.
  • Strong month end dollar demand.

India remains one of the best investment opportunities for the long term.  However the drop in currency is causing concerns.

Gold

Trading in gold is listless in the absence of any major development.

Oil

Iran has warned that it will stop movement of all oil through the Strait of Hormuz if its exports through the Strait are restricted (based on potential sanctions by the U. S.).  30% of all sea borne oil travels through the Strait. The Strait is a narrow choke point.  This is causing strong buying in oil.

Office Closed

You know our team works hard to help you succeed at your investments.  To allow our team members more time with their families, our offices will be closed tomorrow.  There will be no Morning Capsule. However if there is a significant market development, we will do posts as needed.

Technical Patterns

Semiconductor stocks are tracing a Megaphone Bottom.  This is bullish.  ETFs of interest are SOXX and SMH.

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 lower.

Currencies are range bound.

Interest rates are ticking down and bonds are ticking up.

Gold futures are at $1210, silver futures are at $14.71, and oil futures are $69.96.

S&P 500 resistance levels are 2918, 2925 and 2950; support levels are 2860, 2840 and 2800.

DJIA futures are down 68 points.

PAY ATTENTION: STOCK MARKET SENTIMENT REACHES ‘VERY HIGH’ LEVEL

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

Sentiment Reaches ‘Very High’ Level

Stock market sentiment has reached ‘very high’ level.  Investors need to pay attention for two reasons.

  • Historically it is common for strong up moves when sentiment reaches this high level.  For example, take a look at the moves in December 2017 and January 2018.
  • When sentiment reaches very high level, the market also has the propensity to abruptly reverse and go into a correction.

Under these market conditions, it is important to pay attention to the ‘What To Do Now’ section below.  As tempting as it is to aggressively buy, it is important to exercise patience and stay disciplined.

Momo Crowd And Smart Money In Stocks

The momo crowd is aggressively buying in the early trade. The smart money is inactive.

Gold

There was significant profit taking in gold yesterday. As of this writing gold is trying to recover.  The smart money continues to be inactive.

Oil

API inventory data was bearish.  Oil inventories unexpectedly rose 38K barrels vs. consensus of a draw of 522K barrels.  None the less heaving buying is occurring in oil ahead of EIA data that will be released at 10:30 am ET.

Technical Patterns

An Outside Bar has occurred in gold miners. This is bearish.  ETF of interest is GDX. However, this pattern can be easily invalidated by a slight  weakness in the dollar.

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.

Currencies, interest rates and bonds are range bound.

Gold futures are at $1210, silver futures are at $14.79, and oil futures are $69.18.

S&P 500 resistance level is 2918; support levels are 2860, 2840 and 2800.

DJIA futures are up 3 points.

TRADE DEFICIT RISES, MEXICO DEAL DONE, MOMO BUYS STOCKS

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

Trade Deficit Rises

July trade deficit came at $72.2 billion vs. $68 billion consensus.  While Trump is working hard to reduce the trade deficit, the trade deficit is increasing.  For the time being the stock market is ignoring this harsh reality.

Mexico Trade Deal Done

The Arora Report was ahead of almost everyone in predicting back on July 24th that a trade deal with Mexico would be done before the November elections and calling for buying Mexico ETF.

Yesterday morning we shared with you that the trade deal was close.  Now the trade deal is done

Momo Crowd And Smart Money In Stocks

The momo crowd is aggressively buying stocks. The smart money is inactive.

Gold

Gold is priced in dollars.  For this reason when the dollar weakens, gold rises.  The dollar is weakening this morning.  This is giving a boost to gold.  The momo crowd is aggressively buying gold.  The smart money is inactive.

Oil

Trading in oil is listless ahead of API inventory data that will be released at 4:30 pm.

Technical Patterns

Semiconductor stocks are tracing a Diamond. This is bullish.  ETFs of interest are SOXX and SMH.

Large cap biotechs are breaking out.  This is bullish.  ETF of interest is IBB.

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 can quickly turn negative because the market is overbought.

Interest rates are ticking up and bonds are ticking down.

Gold futures are at $1218, silver futures are at $14.87 and oil futures are $68.98.

S&P 500 resistance level is  2918; support levels are 2860, 2840 and 2800.

DJIA futures are up 36 points.

DOVISH POWELL, U.S. AND MEXICO CLOSE TO A DEAL, MOMO BUYS STOCKS

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

Dovish Powell

In our analysis, Powell was more dovish than expected in his Jackson Hole speech.  Please be aware that many experts disagree with our assessment.

The dovishness in Powell’s speech helped the stock market rally on Friday.  The positive sentiment from Powell’s speech is being carried into the stock market premarket trading.

U. S. Mexico Deal

There are reports that the U. S. and Mexico are close to a trade deal.  Once again our call on Mexico is proving spot on.  On July 24th, the headline on our post in ZYX Emerging read:

SIGNAL: BUY MEXICO AS TRUMP MAY FEEL COMPELLED TO STRICK A DEAL

Any deal with Mexico is likely to create positive sentiment and be positive for the market.

Chinese Defend Yuan

The Chinese government is defending its currency yuan.  This is creating positive sentiment in Chinese stocks.

Momo Crowd And Smart Money In Stocks

The momo crowd is aggressively buying stocks in the early trade.  Smart money is inactive.

Gold

Gold continues to see the momo crowd buying.  Weaker dollar is also helping gold.  The smart money is inactive.

Oil

Trading in oil is listless in the absence of any major news.

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 the stock market is overbought in the short term and thus the indicator can quickly swing negative.

Interest rates are ticking up and bonds are ticking down.

The dollar is slightly weaker.

Gold futures are at $1212, silver futures are at $14.75, and oil futures are $68.76.

S&P 500 resistance level is 2918; support levels are 2860, 2840 and 2800.

DJIA futures are up 141 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 22% – 32% and short to medium-term hedges of  10% – 15% and very short term hedges of 15%.

 

A knowledgeable investor would have turned $100,000 into over $1,000,000 with the help from The Arora Report. NOW YOU TOO CAN ALSO SPECTACULARLY SUCCEED AT MEETING YOUR GOALS WITH THE HELP OF THE ARORA REPORT. You are receiving less than 2% of the content from our paid services. …TO RECEIVE REMAINING 98% INCLUDING MANY ATTRACTIVE INVESTMENT OPPORTUNITIES, TAKE A FREE TRIAL TO PAID SERVICES.

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Check out our enviable performance in both bull and bear markets.

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