(The Weekly Digest reproduces the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers. )
RETAIL MASSACRE AND THREAT OF DEFLATION
In the U. S. retail stocks are being massacred. As an example, Nordstrom (JWN) is down about $13 this morning after reporting lousy earnings. Even discounters such as TJX are being hit as Nordstrom Rack reported lower comps. This follows on the heels of Macy’s (M) experiencing one of the biggest losses ever for the stock. Accessory maker Fossil is down $12.
On the positive side, KSS and JCP have reported good earnings.
October Retail Sales Ex-auto came at 0.2% vs. 0.4% consensus.
October Core PPI came at -0.3% vs. +0.1% consensus. This indicates a threat of deflation. This may also influence the Fed in raising interest rates.
Oil continues to fall.
So far rally attempts in gold, silver, and copper have failed.
Interest rates are ticking down on poor retail data.
Dollar is strengthening as it keys on ECB easing next month and ignores weak data in the U. S.
Our very, very short-term early stock market indicator is negative but can quickly turn positive as the market is over sold in the very, very short-term.
A Reminder
As our long time subscribers know well, that during the 2008 and early 2009 market crash, when stock market lost about 50%, subscribers to The Arora Report made money by the boat load. For long only investors, this remarkable performance was achieved by using inverse ETFs.
Our models do not expect a repeat of 2008. In the most likely worst case, there may be a garden variety bear market that typically occurred every 18 to 24 months prior to the recent six-year market run.
What To Do Now?
A year-end rally is likely. The plan at this time is to position for a year-end rally in a defensive manner. Further the plan is to position for a January Effect. A list of over 50 January Effect stocks with buy zones and position size will be published on ZYX Buy Change Alert in the near future.
Expect comprehensive posts in ZYX Global Multi Asset Allocation Alert and ZYX Emerging Markets ETF Alert in the near future to position for a potential rally.
It is important for investors to look ahead and not in the rear view mirror.
Consider only adding new positions per new posts since October 1st.
Consider continuing to hold existing positions. Based on individual risk preference, continue to hold 30-50% cash or hedges.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.
Gold futures are at $1083, silver futures are at $14.18, and oil futures are $41.65.
S&P 500 resistance levels are 2063, 2100, and 2111; support levels are 2017, 2000, and 1962.
DJIA futures are down 43 points.
SIX FED OFFICALS TO SPEAK TODAY; OIL, GOLD, SILVER AND COPPER BREAK SUPPORT
Six Fed officials will speak today. In recent past, speeches from various Fed officials have often been at odds with each other. It will be interesting to see if Fed officials fall in line behind Yellen this time.
Draghi indicates more easing in Europe next month. Euro briefly feel below 1.07.
Gold has broken support at $1080.
Silver has broken support at $14.26.
Copper has broken support at $2.18.
Oil has broken support at $43.00 and is accelerating downwards as of this writing.
Interest rates are heading nearing their highs.
Our very, very short-term early stock market indicator is negative.
A Reminder
As our long time subscribers know well, that during the 2008 and early 2009 market crash, when stock market lost about 50%, subscribers to The Arora Report made money by the boat load. For long only investors, this remarkable performance was achieved by using inverse ETFs.
Our models do not expect a repeat of 2008. In the most likely worst case, there may be a garden variety bear market that typically occurred every 18 to 24 months prior to the recent six-year market run.
What To Do Now?
A year-end rally is likely. The plan at this time is to position for a year-end rally in a defensive manner. Further the plan is to position for a January Effect. A list of over 50 January Effect stocks with buy zones and position size will be published on ZYX Buy Change Alert in the near future.
Expect comprehensive posts in ZYX Global Multi Asset Allocation Alert and ZYX Emerging Markets ETF Alert in the near future to position for a potential rally.
It is important for investors to look ahead and not in the rear view mirror.
Consider only adding new positions per new posts since October 1st.
Consider continuing to hold existing positions. Based on individual risk preference, continue to hold 30-50% cash or hedges.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.
Gold futures are at $1074, silver futures are at $14.21, and oil futures are $41.76.
S&P 500 resistance levels are 2100, 2111, and 2132; support levels are 2038, 2017, and 2000.
DJIA futures are down 122 points.
COPPER NEAR SIX-YEAR LOW, OIL TO REACH $80 BY 2020
Our long time subscribers know that Producer Price Index (PPI) has a heavy weight in our models. Our reasoning is that the price trends show up in PPI long before they show up in Consumer Price Index (CPI). For awhile we have been sharing with you that PPI in China has been falling. Our prediction has been that sooner or later CPI in China will start falling. We have been in a small minority as vast majority of analysts and economists have been talking about CPI in China rising. Today our prediction has come true like every other prediction we have made about China since 2007. CPI in China fell to 1.3% vs. consensus of 1.6%.
Four-day rally in China came to a halt on the CPI news.
On the CPI news copper has fallen to a near six-year low. Copper is often called Dr. Copper because it gives a good sense of economic growth and cannot be directly manipulated by central banks. As a full disclosure, ZYX Short Sell Change Alert has a short position in copper and Southern Copper.
IEA says that by 2020 oil prices will reach only $80. This flies in the face of energy bulls.
Interest rates, oil, and gold are range bound. Silver has broken support at $14.50.
The dollar continues to scream higher. Euro dollar has just broken support at 1.07.
Our very, very short-term early stock market indicator is negative.
What To Do Now?
It is important for investors to look ahead and not in the rear view mirror.
Consider only adding new positions per new posts since October 1st.
Consider continuing to hold existing positions. Based on individual risk preference, continue to hold 30-50% cash or hedges.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.
Gold futures are at $1087, silver futures are at $14.33, and oil futures are $43.73.
S&P 500 resistance levels are 2100, 2111, and 2132; support levels are 2038, 2017, and 2000.
DJIA futures are down 33 points.
SAUDI TO KEEP ON PUMPING, MODI LOSES BIHAR
The new information from Saudi Arabia is that the kingdom plans to keep on pumping oil irrespective of price. Paradoxically, the news led to short covering in oil in Europe. To the uninitiated, this may seem strange. However, such behavior is common in the markets.
India has been one of the bright spots of growth in the global economy. There are still lofty expectations for the Prime Minister Modi to carry out reforms. The results announced on Sunday from election in Bihar, the fourth largest state in India, show that Modi experienced a crushing defeat. Our information is that the opposition is taking Modi’s defeat in Bihar as a mandate to stop reforms. So far the Indian stock market has not reacted negatively because most of Indian industrialists are now aligned with Modi. However without structural reforms, Indian market is likely to fall as it is expensive on valuation metrics.
Export data from China came below consensus. Shanghai market went up on the news as it ignited speculation of further easing by PBOC.
Gold, silver and copper are attempting a feeble rally.
Interest rates are hanging near their highs.
Dollar continues to strengthen.
Our very, very short-term early stock market indicator is negative.
What To Do Now?
It is important for investors to look ahead and not in the rear view mirror.
Consider only adding new positions per new posts since October 1st.
Consider continuing to hold existing positions. Based on individual risk preference, continue to hold 30-50% cash or hedges.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.
Gold futures are at $1090, silver futures are at $14.62, and oil futures are $44.73.
S&P 500 resistance levels are 2100, 2111, and 2132; support levels are 2063, 2038, and 2017.
DJIA futures are down 37 points.
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