WEEKLY MARKET DIGEST: FED AHEAD, QUAD WITCHING BUYING, UNUSUAL BEHAVIOR IN GOLD ON N. KOREA MISSILE ABLE TO REACH GUAM, $DIA $GLD $QQQ $SLV $SPY

WEEKLY MARKET DIGEST: QUAD WITCHING BUYING, UNUSUAL BEHAVIOR IN GOLD ON N. KOREA MISSILE ABLE TO REACH GUAM, FED AHEAD $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.

QUAD WITCHING, GUAM NOW IN N. KOREA MISSILE RANGE BUT MARKET IGNORES IT, WEAK RETAIL SALES

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

Quad Witching

Today is quad witching.  It appears that upward pressure from quad witching is containing the reaction to N. Korean missile launch.  It is conceivable that the market may react after futures expire this morning.

Guam Within Reach

N. Korea fired a new missile over Japan.  The missile traveled 2300 miles.  Guam is 2100 from N. Korea.

Selling In Gold On N. Korea But Buying On Retail Sales

In an unusual behavior, there was aggressive selling in gold after the launch of N. Korean missile.

After weak retail sales data was reported, selling ceased and buying came in.  The theory is that weak retail sales ahead of FOMC meeting next week make an interest rate hike less likely.

Weak Retail Sales

The U. S economy is about 70% consumer.  For this reason, we pay a lot of attention to retail sales.  Retail Sales came at -0.2% vs.+0.1% consensus.

Weak Industrial Production

Industrial Production came at -0.9% vs. +0.2% consensus.

Capacity Utilization came at 76.1% vs. 76.8% consensus.

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.

Dollar is weaker.

Momo crowd is buying oil.

Interest  rates and bonds are range bound.

Gold futures are at $1330, silver futures are at $17.78, and oil futures are $49.83.

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

DJIA futures are down 20  points.

MARKET DOES NOT LIKE CPI NUMBER AHEAD OF FED MEETING, GOLD VOLATILE ON CPI, COPPER FALLS ON CHINA, OIL RALLIES

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

Fed Meeting

The Fed meets next week.  FOMC will announce its rate decision at 2:00 pm on September 20th.

The market is very sensitive to  economic data ahead of the Fed meeting.

Hot Headline CPI

Consumer Price Index (CPI) headline number came at 0.4% vs. 0.3% consensus.  The stock market does not like this number.  The reason is the stock market has decided that the Fed will not raise interest rates this year. A hotter CPI number puts cold water on the market’s assumption.

In our models, we look at Core CPI. Core CPI came at 0.2% vs. 0.2% consensus.  In our analysis, headline CPI is not going to influence the Fed.  Historically the Fed has not paid much attention to headline CPI number.

Gold Volatile On CPI and N. Korea

Gold is very volatile on the CPI number.  In general a higher CPI number is good for gold. But at this time if a higher CPI number leads to higher interest rates, higher interest rates are bad for gold.

There is a report that N. Korea is preparing for a missile launch this weekend.  This report is supporting gold.

Oil Rallies

Yesterday we shared with you IEA report.  Oil continues to rally on that report and is now approaching $50.

Copper Falls On China Data

Copper is falling on weaker industrial output data in China.

Technical Patterns

Oil is tracing a Diamond Bottom.  This is bullish.  ETF of interest is .

Several home construction stocks are tracing an Engulfing Line.  This is bearish.  ETF of interest is .

Spanish stocks are tracing a Engulfing Line.  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 negative.

Dollar is stronger.

Interest rates are ticking up and bonds are ticking down.

Gold futures are at $1326, silver futures are at $17.77, and oil futures are $49.90.

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

DJIA futures are down 22 points.

QUAD WITCHING AHEAD, BUYING IN GOLD ON WEAKER DOLLAR, OIL MOVES UP

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

Quadruple Witching

Quadruple witching is this Friday when index futures, index options, single stock options, and single stock futures expire.  This expiry has been exerting upward pressure on the stock market.

Often part of the gains from this week get reversed in the following week.

Buying In Gold On Weaker Dollar

Gold prices are moving up on weaker dollar.

Oil Moves Up

Oil is moving up on a report by International Energy Agency  (IEA) that oil demand will go up this year by the most since 2015.

OPEC is talking about extending its accord on oil production.

API reported an oil build of 6.18 million barrels vs. 10 million barrels consensus.

Gasoline inventories fell by 7.896 million barrels vs. consensus of a fall of 4 million barrels.

EIA data, which is considered more authoritative, will be released at 10:30 am ET.

Producer Price Index

Producer Price Index (PPI) is a leading indicator of inflation.  Core PPI came at 0.2% vs. 0.2% consensus.

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.

Interest rates and bonds are range bound.

Gold futures are at $1335, silver futures are at $17.89, and oil futures are $48.68.

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

DJIA futures are down 13  points.

N. KOREA RISK DIMINISHES, STOCK RALLY SPREADS, DEMAND FOR SAFE HAVENS WANES

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

N. Korea Risk Diminishes

United Nations has agreed on new sanctions against N. Korea.  Media is buying into Trump administration’s spin that these are very strong sanctions.

Our insight is that contrary to the spin and media reports, these sanctions are really watered down and are not likely to materially impact N. Korea.  Please note that the sanctions do not include all important oil imbargo.  Our judgement is  that there may be a  secret back-channel deal between N. Korea and China for N. Korea to be less aggressive.

Stock Rally Spreads

The stock rally from the United States has spread across the globe.

Demand For Safe Haven Wanes

Demand for safe havens of gold, bonds and yen is waning.

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 was experiencing aggressive buying earlier this morning but over the last 15 minutes aggressive selling is coming in.

Gold was experiencing aggressive selling this morning but over the last 15 minutes aggressive buying is coming in.

Still trying to figure out what has changed over the last 15 minutes.

Gold futures are at $1329, silver futures are at $17.86, and oil futures are $48.32.

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

DJIA futures are up 54  points.

HURRICANE DAMAGE ONLY ABOUT 25% OF EXPECTATIONS

 

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

Hurricane Damage

Hurricane damage is likely to be only about 25% of expectations.

Last week, we were the only reputable firm giving you contrary insight that has proven spot on.  In the world of uncertain predictions, it doesn’t get any better than that.  We wrote:

Here is an insight.  Contrary to what the media is saying, there is still a fair probability that Irma may not hit Florida as hard as expected.  If this comes true, then on Monday many of the moves being seen will reverse and there may be several trading opportunities.  The problem with buying or short selling these stocks or ETFs now is that the storm is not projected to hit until Sunday when the markets are closed.  On Monday these stocks can gap up or down potentially either making a lot of money or losing a lot of money.  There is not a good way to control the risk at this time. It is best to wait until Monday even at the cost of missing the opportunities.

Stocks

Stocks are likely to jump on less damage.

Gold

Gold is falling on less damage and nothing new from North Korea.

Economic Indicators

All economic indicators are likely to get a boost from the rebuilding and cleanup after the hurricanes.

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.

Dollar is stronger.

Interest rates are ticking up and bonds are weaker.

There is selling pressure in oil.

Gold futures are at $1337, silver futures are at $17.83, and oil futures are $47.47.

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

DJIA futures are up 125 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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