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.
TRUMP’S AUTO THREAT, BITCOIN CRIMINAL PROBE, OPEC EASING, OFFICE CLOSED
To gain an edge, this is what you need to know today.
Trump’s Auto Threat
Trump is threatening new tariffs on imported cars and trucks. An additional duty of up to 25% is under consideration. This is negatively affecting stocks in Japan, South Korea and Germany. These are the countries exporting most cars to the United States.
Interestingly, it is only slightly helping General Motors (GM) and Ford (F) in the early trade.
In our analysis, Trump’s real target may not be what is seems on the surface. The real target may be Canada and Mexico. The content of a lot of the autos coming into the United States is being produced in Canada and Mexico. Trump is trying to negotiate a better NAFTA.
Momo Crowd And Smart Money
The momo crowd is selling in the early trade. The smart money is inactive.
House Price Index
House Price Index came at an increase of 0.1% vs. 0.6% consensus. This indicates that on a national level, increases in house prices are slowing.
Gold
Gold is gaining strength on the weaker dollar. Now it is knocking at the door of resistance at $1300.
Oil
Oil is being aggressively sold on reports that OPEC and Russia are looking at easing production cuts.
Bitcoin Criminal Probe
The Justice Department has started a criminal probe into Bitcoin and digital currencies. The concern is that the prices are being manipulated by traders.
Office Closed
You know that our team works hard for you. To give our team members more time with their families, our offices will be closed tomorrow for the Memorial Day holiday. The stock exchanges will be open tomorrow but closed on Monday.
Technical Patterns
Semiconductors are tracing a Flag. This is bullish. ETF of interest is 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 negative but can quickly turn positive.
The dollar is weaker.
Interest rates are ticking down and bonds are ticking up
Gold futures are at $1298, silver futures are at $16.59 and oil futures are $70.85.
S&P 500 resistance levels are 2740, 2765 and 2800; support levels are 2700, 2688 and 2661.
DJIA futures are down 61 points.
TRUMP STATEMENTS AND OPEC RUMOR CAUSE CONCERN, FED MINUTES AHEAD
To gain an edge, this is what you need to know today.
Trump Comments
Trump cast doubt on near term success in trade talks with China. Trump also said that the summit with North Korea may not take place or may not be successful.
These comments have increased geopolitical risk causing the momo crowd to sell.
OPEC Rumor
Lately oil has been rising. We have previously shared with you that this was positive for the stock market in the short-term. Yesterday afternoon a rumor arose that OPEC may increase oil production. Oil has dipped only slightly on the rumor but it has caused a bigger sell off in oil stocks and dampened the optimism.
The OPEC rumor is foreshadowing API data released yesterday after the market close and EIA data that will be released at 10:30 am ET.
Momo Crowd And Smart Money
The momo crowd were aggressive buyers yesterday morning. The momo crowd aggressively sold yesterday afternoon. In the early trade this morning, the momo crowd continues to aggressively sell.
The momo crowd continues to lose money but so far has not changed its trading pattern. This is one of the reasons behind the market volatility.
The smart money is inactive in the early trade.
Gold
Some safe haven money is flowing out of stocks into gold providing support.
Fed Minutes
FOMC minutes will be released at 2:00 pm ET. We will be carefully studying the minutes to look for clues indicating the direction of interest rates.
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 but can quickly turn.
Interest rates are ticking down and bonds are ticking up.
Yen is stronger as safe haven money flows into it.
Gold futures are at $1288, silver futures are at $16.35, and oil futures are $71.84.
S&P 500 resistance levels are 2740, 2765 and 2800; support levels are 2700, 2688 and 2661.
DJIA futures are down 166 points.
CHINA TARIFF CUT AND ZTE RESOLUTION CREATING POSITIVE SENTIMENT TO ADD TO THE MOMENTUM
To gain an edge, this is what you need to know today.
Tariff Cut
China has announced it will cut import tariffs on passenger cars from 25% to 15%. This will benefit European automakers more than the U. S. automakers.
ZTE Resolution
China and the U. S. have developed an outline to resolve the ZTE situation. (Please see the Morning Capsule dated May 14.) This is a big deal and creating positive sentiment.
Momo Crowd And Smart Money
The momo crowd continues to be aggressive buyers in the early trade. The momo crowd was aggressive buyers throughout yesterday.
The smart money was selectively buying yesterday early morning but then stopped buying when the market rose. The smart money is inactive this morning.
Gold
Gold is getting a lift on the weaker dollar.
Oil
Oil is moving higher on the U. S. taking a hard line towards Iran. The U. S. wants Iran to completely stop uranium enrichment and stop supporting various movement in the region.
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 can quickly turn.
Interest rates are ticking up and bonds are ticking down.
The dollar is slightly pulling back.
Gold futures are at $1294, silver futures are at $16.62, and oil futures are $72.62.
S&P 500 resistance levels are 2740, 2765 and 2800; support levels are 2700, 2688 and 2661.
DJIA futures are up 54 points.
AGGRESSIVE STOCK BUYING ON CHINA TRADE WAR TRUCE
To gain an edge, this is what you need to know today.
China Trade War Truce
The U. S. and China have managed a trade war truce. Tariffs on Chinese imports will be postponed.
November Problem
Investors always need to look ahead. Today investors and the media are focused on the trade war truce. Indeed this is good news in the short term. However, there are no significant details and no specific quotas. In spite of the temporary bullishness, the trade deficit with China may not be reduced much.
The U. S. mid-term election is coming in November. The truce with China is likely to be unpopular with Trump’s base Trump may start new anti-China rhetoric to win the election.
Beneficiaries
The main beneficiaries will be soybeans, cotton, airplanes, liquefied natural gas and semiconductors. All of these sectors are opening gap up by significant amounts. This makes it highly risky to take positions right here. We will do individual posts as appropriate.
Momo Crowd And Smart Money
The momo crowd is aggressively buying in the early trade. The smart money is selectively buying.
Gold
The dollar is stronger and that is hurting gold.
Oil
Trading in oil is listless. On the negative side, nothing bad happened over the weekend. On the positive side, trade war truce is bullish.
Technical Patterns
Vietnamese stocks are tracing an Inside Bar. This is bullish. ETF of interest is VNM.
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.
Gold futures are at $1286, silver futures are at $16.51, and oil futures are $71.57.
S&P 500 resistance levels are 2740, 2765 and 2800; support levels are 2700, 2688 and 2661.
DJIA futures are up 212 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 18% – 30% and short to medium-term hedges of 10% – 15% and very short term hedges to zero.
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