WEEKLY MARKET DIGEST: PENSION FUND BUYING LIFTS DJIA 865 POINTS FROM THE LOW, MARIJUANA BID REJECTED $DIA $GLD $QQQ $SLV $SPY $TBT $USO

WEEKLY MARKET DIGEST: PENSION FUND BUYING LIFTS DJIA 865 POINTS FROM THE LOW, MARIJUANA BID REJECTED $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.

PENSION FUND BUYING LIFTS DJIA 865 POINTS FROM THE LOW, MARIJUANA BID REJECTED, OFFICE CLOSED

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

Pension Fund Buying

The day before yesterday, we shared with you that pension fund buying was ahead and for this reason we reduced cash so that it could be deployed in the market.  We even gave a signal for a short term trade to buy SPY or SSO in ZYX Buy. Over a 1000 point DJIA rally followed.  Yesterday the momo crowd was aggressively selling.  At the lows pension fund buying came again and lifted DJIA 865 points from its lows.

The day before yesterday and yesterday, we had clarity about pension fund buying coming into the market to support the stocks. Today here is the key question: Is the pension fund buying done?  There is less clarity on this.  There are some estimates that the majority of pension fund buying is still to come. However a different set of analysis shows that as much as 70% of the pension fund buying may already be done.

Momo Crowd And Smart Money In Stocks

The momo crowd was an aggressive seller driving the market down yesterday.  There was also aggressive short selling. When pension funds started buying during the last hour before the close, the momo crowd and short sellers suffered big losses.

The smart money was selectively and lightly buying near the lows as has consistently been smart money’s pattern over the last few days.  When the market rose, smart money stopped buying.

Today in the early trade, the momo crowd is again aggressively selling.  The smart money is inactive.

Expect More Volatility

It is not all clear. Expect more volatility and stay cautious.

Gold

Yesterday we shared with you the double bottom in silver.  Silver continues to see money flowing in as more and more investors notice the double bottom.

Gold continues to see some buying on a slightly weaker dollar.  The momo crowd is also aggressively buying gold.  Many gurus are making predictions that gold will fly next year.  It is worth noting that many of the same gurus have made exactly the same prediction at the end of every year for a long time.  In other words, take such predictions with a grain of salt.

Oil

The momo crowd is getting whipsawed in oil.  The momo crowd was selling oil earlier today but is buying oil as of this writing.   The smart money is inactive.

API data showed a build of 6.9 million barrels in oil inventory vs. consensus of a draw of 2.8 million barrels.  This data is bearish.

EIA data will be the next market moving event.

Office Closed

Our offices will be closed on Monday for the New Years holiday.  There will be no Morning Capsule.

Marijuana

APHA received a hostile  bid from GGBXF. The bid has been rejected. However this is building positive sentiment in marijuana stocks on anticipation of more buyouts.  APHA is in ZYX Buy portfolio and we will do a separate post.

Technical Patterns

Many oil MLPs are tracing an inside bar.  This is bullish.  ETF of interest is AMLP.

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 swing negative.

Interest rates are ticking up and bonds are ticking down.

Dollar is weaker.

Gold futures are at $1280, silver futures are at $15.41, and oil futures are $44.91.

S&P 500 resistance levels are 2550, 2594 and 2615; support levels are 2450, 2425 and 2400.

DJIA futures are up 122  points.

NATURAL GIVEBACK AFTER 1000 DOW POINT RALLY, DOUBLE BOTTOM IN SILVER

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

1000 Point Rally

The headline of yesterday’s Morning Capsule , written in the middle of gloom, read:

MORNING CAPSULE: REDUCE CASH, PROBABILITY OF A RALLY, PENSION FUND BUYING, OIL AT SUPPORT, MONEY FLOWS INTO GOLD

That call has proven spot on.

  • Pension funds bought.
  • Market ran up over 1000 Dow points.
  • Money flew into gold even in the face of rising stock prices.
  • Oil staged a major gain after bouncing from the support mentioned in the Morning Capsule.

We also shared with you in advance of the strong moves that smart money was buying stocks and oil.  It does not get any better than this when it comes to signals.

Giveback

After a strong rally, it is common to giveback about one-third to one-half of the gain.  If more than two-thirds of the gain is given back, that will be a cause for concern.

Jobless Claims

Initial Jobless Claims came at 216K vs. 225K consensus.  This is a leading indicator and carries heavy weight in our models.  This indicates that the economy continues to be strong.

Momo Crowd And Smart Money In Stocks

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

Gold

Money continues to flow into gold.  The momo crowd is aggressively buying gold in the early trade.  Smart money is inactive.

Silver has traced a double bottom and has broken above $15 psychological  key level.  The future direction will depend on the direction of stocks and the dollar.

Oil

Oil is experiencing a natural pullback after a very strong gain.  The momo crowd is getting whipsawed in the early trade.  The smart money is inactive.

Marijuana

Thailand is legalizing medical marijuana.  Marijuana stocks are beginning to move with the market as was the case yesterday.  Previously marijuana stocks were moving independent of the market. The momo crowd is lightly buying. The smart money is inactive.

Technical Patterns

Silver is tracing a double bottom.  This is bullish.  ETF of interest is SLV.

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 and can swing either way.

Interest rates are ticking down and bonds are ticking up.

Currencies are range bound.

Gold futures are at $1276, silver futures are at $15.23, and oil futures are $67.94.

S&P 500 resistance levels are 2450, 2500 and 2550; support levels are 2425, 2400 and 2330.

DJIA futures are down 350 points.

REDUCE CASH, PROBABILITY OF A RALLY, PENSION FUND BUYING, OIL AT SUPPORT, MONEY FLOWS INTO GOLD

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

Reduce Cash

Under present market conditions, it makes a big difference if you are aggressive or conservative.  Aggressive investors may consider reducing cash to deploy in the market. However, conservative investors may consider being close to the top end of the cash levels and hedges.  Please see ‘What To Do Now’ section below.

Probability Of A Stock Rally

Here are the probabilities for the stock market.

  • A rally 65%
  • A decline 25%
  • Range bound 10%

Investors need to understand that the only realistic way to think about the stock market is in terms of probabilities.  There are no certainties in the stock market.  Right now the probability of a rally is fairly high, perhaps punctuated with more downdrafts.

Pension Fund Buying

Many pension funds are likely to rebalance.  In rebalancing, they are likely to buy stocks. This is a positive.

Factors To Consider

Here are important factors to consider.

  • The stock market is very oversold.  Oversold markets tend to rally.
  • The economy is slowing but still in good shape.
  • After this pullback, on valuation basis, stocks are no longer expensive.
  • A majority of the selling is technically driven and not fundamentally driven.
  • Year-end tax loss selling is exasperating the selling.
  • There is low liquidity making it easier for the machines and algos to push the market down.

Momo Crowd And Smart Money In Stocks

The momo crowd continues to aggressively sell.  Smart money is selectively buying.

Gold

Money is flowing out of stocks into the safe haven of gold.  The momo crowd is aggressively buying gold.  Smart money is inactive.

Oil

Oil is in the support zone of $42 to $43.50.  The breaking news is that OPEC is prepared to call an ‘extraordinary meeting.’  In theory, this should support and oil should rally from here.  However the momo crowd does not care about anything but momentum.  The momentum is still to the downside. The momo crowd is aggressively selling oil.

The smart money is lightly buying oil.

Marijuana

FDA disapproves of adding CBD to foods and drinks.  This is a negative for marijuana stocks.  However marijuana stocks are likely to move with the rest of the market.  After a prolonged period in which marijuana stocks did not move with the market, now they are beginning to move with the market.

Technical Patterns

Oil service stocks are tracing an inverted hammer.  This is bullish.  ETF of interest is OIH.

Junior gold miners are tracing a diamond bottom. This is bullish.  ETF of interest is GDXJ.  Please note that if gold pulls back, so will gold stocks.

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 due to low liquidity and year-end tax loss selling it can easily swing negative.

Interest rates are ticking down and bonds are ticking up.

Dollar is slightly weaker.

Gold futures are at $1257, silver futures are at $14.93, and oil futures are $43.21.

S&P 500 resistance levels are 2400, 2425 and 2450; support levels are 2330, 2300 and 2250.

DJIA futures are up 173  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 17% – 31% and short to medium-term hedges of  5% – 15% and short term hedges of zero.

 

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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