WEEKLY MARKET DIGEST: PREPARE FOR POTENTIAL FRONT RUNNING OF SEPTEMBER IN AUGUST, GOLD SOLD $DIA $GLD $QQQ $SLV $SPY $TBF $TBT $USO

WEEKLY MARKET DIGEST: PREPARE FOR POTENTIAL FRONT RUNNING OF SEPTEMBER IN AUGUST, GOLD SOLD $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.

STRONG JOBS REPORT, MUELLER IMPANELS GRAND JURY, GOLD SOLD

This is what you need to know today.

Strong Jobs Report

Non-farm Private Payrolls came at 205K vs. 175K consensus.

Unemployment rate came at 4.3% vs. 4.3% consensus.

Average hourly earnings month over month came at 0.3% vs. 0.3% consensus.

The job report shows that economy continues to be strong.

Gold

Gold is being sold on a strong jobs report.

Bonds

Bonds are being sold on a strong jobs report.

Stocks

The momo crowd is aggressively buying stocks.  Strong jobs report means a better economy and according to one school of thought, a higher stock market.

The ‘smart money’ is lightly selling up spikes.

Impanels

Special Counsel Robert Mueller impanels a grand jury for his Russia investigation.  This is again crossing Trump’s red line.  The dollar dipped on the news (please note that since then there is strong jobs report altering the picture).

The smart money sold on the news but the momo crowd aggressively bought the slight dip.

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.

Oil is range bound.

Dollar is stronger on jobs report.

Gold futures are at $1289, silver futures are at $16.60, and oil futures are $48.96.

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

DJIA futures are up 59 points.

PREPARE FOR POTENTIAL FRONT RUNNING OF SEPTEMBER IN AUGUST

This is what you need to know today.

Seasonal Pattern

The stock market exhibits a significant seasonal pattern.  It is common for stocks to go down in September and October followed by a year-end rally.

Front Running September

Last year, professionals were front running September.  In plain English, it means that professionals were selling in August anticipating a weakness in September.

Two Differences This Year

On the negative side the market has been straight up and therefore there is potential for a significant pull back.

On the positive side Trump has laid out an aggressive agenda for tax reform.  If signs emerge that Democrats will cooperate, stock market can shoot up.

Buying Opportunity

Based on the data so far, it is likely that a dip may be a buying opportunity.

Please Review Your Portfolio

This is a good time to review your portfolio.  Please pay extra attention to the What To Do Now section below.

Korea

President Moon has a plan for economic reforms that imposes higher taxes on the largest companies in the country.  Korean stocks are coming under pressure.

Brazil

Brazilian President Temer beats corruption charges.  Brazilian market is running up.

U. K.

The Bank of England keeps interest rates on hold.  The new forecast released by the bank cuts GDP growth outlook.

Gold

The ‘smart money’ continues to sell gold on up spikes.

Oil

After a brief respite, oil is again experiencing a short squeeze.

Technical Patterns

Long Treasury bonds are tracing a Shooting Star. This is a bearish pattern.  ETF of interest is .

The dollar is tracing a Hammer after a prolonged down turn. This is bullish. ETF of interest .

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 and bonds are range bound.

Gold futures are at $1273, silver futures are at $16.63, and oil futures are $49.90.

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

DJIA futures are up 13 points.

APPLE EUPHORIA SPREADS, WEAKER EMPLOYMENT, SMART MONEY SELLING COMMODITIES

This is what you need to know today.

Apple Euphoria Spreads

Apple reported earnings better than the consensus and the whisper numbers.  Unlike any other stock, euphoria from Apple earnings is spreading into the rest of the market.  We will be doing a new post on Apple in ZYX Buy.

Often such euphoria fizzles out real quickly. However this time the market is under the control of the momo crowd with no knowledge of history.

Weaker Employment

ADP is the largest private payroll processor in the United States.  It uses its data to provide us with a   picture of the employment ahead of the mother of all reports.  The mother of all reports is the employment report from the Department of Labor that will be released on Friday at 8:30 am ET.

ADP employment change came at 178K vs. 187K consensus.

Smart Money Selling Commodities

Commodities have been strong lately.  The ‘smart money’ is taking advantage of the strength to lightly sell gold, silver, oil and copper.

Technical Patterns

Several small caps are tracing a Hammer.  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.

Interest rates are ticking up and bonds are ticking down.

Currencies are volatile in a narrow range.

Gold futures are at $1272, silver futures are at $16.53, and oil futures are $49.24.

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

DJIA futures are up 49  points.

A NEW AGGRESSIVE TAX REFORM IGNITES STOCKS OVERCOMING TECHNICALS

This is what you need to know today.

Aggressive Tax Reform Time Line

After my over 30 years in the market and having vigorously tested most methods of analysis, I can safely say that vast majority of popular analysis methods simply do not work. Having said that, I can confidently say that a combination of forward looking macro analysis combined with a forward looking analysis of earnings projections work most of the time.

New fundamental and macro developments often leave technicals of the market in the dust. The new development is an aggressive time line for tax reform by the Trump administration.

The prevailing wisdom has been that the White House is bogged down and tax reform might not happen until much later. The news is that the White House has set an aggressive time line to get the tax reform done before the end of the year. The White House is calling for the legislation to be drafted by the end of this month. The White House will push for passage by The House by October and by The Senate by November.

Please click here for the annotated chart.

Growth In Europe

The Eurozone economy grew by 0.6% vs. 0.6% consensus in the second quarter. This is good news and is helping stocks.

Personal Income And Spending

The U. S. economy is about 70% consumer based. For this reason, both personal spending and personal income carry heavy weight in the adaptive timing model ZYX Global Allocation that we use at The Arora Report.

June personal spending month-over-month came at 0.1% vs. 0.1% consensus. Personal income month-over-month came a 0.0% vs. 0.3% consensus.

Gold

Gold is seeing light selling by the ‘smart money’ on up spikes. Selling by the smart money is containing the aggressive buying by the momo crowd.

Oil

A short squeeze led oil to over $50. As of this writing the short squeeze seems to be easing and oil is moving back below $50.

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 $1272, silver futures are at $16.79, and oil futures are $49.89.

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

DJIA futures are up 103 points.

EARNINGS HOTTER THAN EXPECTATIONS, GOLD SUPPORTED ON NORTH KOREA, SHORT SQUEEZE ON OIL

This is what you need to know today.

Earnings Hotter Than Expectations

Over half of S&P 500 companies have reported earnings.  Over 72% have reported better than the consensus.

More important is that analysts are ratcheting up their estimates for next quarter.

Obviously so far stocks are responding to better than expected earnings.

Gold Supported On North Korea

North Korea has launched a successful ICBM test.  North Korea is now believed to have the capability to hit U. S. cities as far a Denver.

Gold is supported on the news.  Momo crowd is aggressively buying gold.  This morning there was very light selling by the ‘smart money’ which stopped gold from rising above $1275.  After a brief round of selling, the smart money is inactive.

Oil Short Squeeze

Oil is experiencing a short squeeze.  Earlier it briefly touched $50.

Technical Patterns

Several industrial stocks are tracing an Inside Bar. This is bullish because Inside Bar is being traced after a pullback.  ETF of interest is .  As a note of special interest, there is a position in SPHB in ZYX Allocation. SPHB contains a large number of industrial companies.

Several Thailand stocks are tracing an Inside Bar.  This is bearish because the bar is being traced after an extended rise.  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 the market to start out positive.

Interest rates, bonds and currencies are range bound.

Gold futures are at $1273, silver futures are at $16.81, and oil futures are $49.63.

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

DJIA futures are up 58 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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