WEEKLY MARKET DIGEST: SHOCKING RISE IN NEW JOBS — THE BIGGEST MISS EVER IN ESTIMATES $DIA $GLD $QQQ $SLV $SPY $TBT $USO

WEEKLY MARKET DIGEST: SHOCKING RISE IN NEW JOBS — THE BIGGEST MISS EVER IN ESTIMATES $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.

REDUCE CASH AND HEDGES, UNEXPECTEDLY MAY WAS ONE OF THE STRONGEST MONTHS FOR JOBS

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

Reduce Cash And Hedges

Please see ‘Protection Bands and What To Do Now?’ below.

For most investors it is prudent to wait for pullbacks to make the changes in cash levels and hedges instead of just rushing into them today.  Reducing cash means buying on pullbacks.

Unexpected Jobs Gain

May Non-farm Payrolls came at +2.5M vs. -8.5M consensus.

In plain English, in May 2.5 million new people were hired and on a net basis no jobs were lost.  Economists were expecting no new job creation on a net basis and a loss of 8.5 million jobs.

This data flies in the face of credulity and what most of us have been witnessing first hand.  However this is the second set of unexpected shocking jobs data.  We shared with you similar shocking data from ADP on Tuesday.

Second Leg Of Short Squeeze

We have previously written that a second leg of short squeeze could carry this market to new highs quickly. The second leg of short squeeze is in full swing.

Sell The News

The stock market has been running up. Historically, it is common that when really good news comes along after the market has been running up, stocks sell off.  Investors simply need to be aware of this potential sell the  news reaction.

Great News For Trump Reelection 

The stock market will interpret the new jobs data as great news for Trump reelection.  The stock market loves Trump.  The stock market will expect buying from Trump supporters.

Momo Crowd And Smart Money In Stocks

The momo crowd is extremely aggressively buying stocks in the early trade.  Smart money is lightly selling stocks.

Gold

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

The momo crowd is extremely aggressively selling gold miners.

For longer term, please see gold and silver ratings.

Oil

The momo crowd is extremely aggressively buying oil in the early trade.  Smart money is lightly selling oil.

For longer term, please see oil ratings.

Marijuana

The momo crowd is buying marijuana stocks in the early trade. Smart money is inactive.

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 swing negative.  This indicator, with a great track record, is popular among long term investors to stay in tune with the market and among short term traders to independently undertake quick trades.

Interest rates are ticking up and bonds are ticking down.

The dollar is stronger.

Gold futures are at $1690, silver futures are at $17.53, and oil futures are $39.03.

S&P 500 futures resistance levels are  3182, 3200 and 3228: support levels are 3155, 3124 and 3114.

DJIA futures are up 665 points

MORE CENTRAL BANK INTERVENTION AND STIMULUS IN EUROPE, A NEW STUDY ON CORONAVIRUS

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

Europe

European Central Bank (ECB) in its meeting decided for additional 600 billion euros of asset purchases.  These purchases will be extended to at least June 2021.

The ruling coalition in Germany has decided on a 130 billion euro stimulus program to accelerate consumer spending and business investing.

New Coronavirus Study

There is a very credible new study out saying that it is highly likely coronavirus infections will spread again in the Fall.  Of course the momo crowd is ignoring it because all they care about is the momentum.

New Coronavirus Cases

In several states, coronavirus cases are still going up and the curve has not flattened as is the general perception in the stock market.

Jobless Claims

Weekly Initial Claims came at 1.877 million vs. 1.8 million consensus.

Momo Crowd And Smart Money In Stocks

The momo crowd is buying stocks in the early trade.  Smart money is selling stock in the early trade.

Gold

The momo crowd is buying gold in the early trade. Smart money is inactive.

For longer term, please see gold and silver ratings.

Oil

The momo crowd is aggressively buying oil in the early trade.  Smart money is lightly selling oil.

For longer term, please see oil ratings.

Marijuana

The momo crowd is buying marijuana stocks in the early trade. Smart money is inactive.

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.  This indicator, with a great track record, is popular among long term investors to stay in tune with the market and among short term traders to independently undertake quick trades.

Interest rates are ticking up and bonds are ticking down.

The dollar is stronger.

Gold futures are at $1722, silver futures are at $18.03, and oil futures are $36.89.

S&P 500 futures resistance levels are  3114, 3124 and  3155: support levels are  3000, 2924 and  2870.

DJIA futures are down 47 points.

UNEXPECTED GOOD NEWS ON JOBS AND OIL, A BUY PROGRAM AND WEAKER DOLLAR

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

Unexpected Good News On Jobs

ADP is the largest private payroll processor in the country.  It uses its data to give a glimpse of the jobs picture.

ADP Employment Change came at -2.76 million vs. -9.0 million consensus.   This unexpected good news says that 6.24 million fewer jobs were lost in May compared to expectations.  The difference between expectations and the reported numbers is huge.

This data does not jive with other data including weekly new unemployment claims we report here and carries heavy weight in our models.

As of this writing, we are still digging into it to see which data set is wrong – the one reported by ADP or the one reported by the government.

Mother Of All Numbers

Monthly jobs report from the Department of Labor is sometimes called ‘Mother of all numbers.’  It will be reported Friday at 8:30 am ET.  The data will either confirm the unexpected good news from ADP or refute it.

It is important to pay attention to new data and not get stuck in opinions. When unexpected new data comes in it deserves attention. If ADP data turns out to be correct, our models will likely become more aggressive in buying stocks but it will be done in a sophisticated way because the stock market is currently very overbought from a technical perspective. Technically overbought markets tend to be vulnerable to the down side.

A Buy Program

In the Afternoon Capsule we shared with you that market on close orders appeared to be on the buy side.  There was a $3.2 billion buy program.  The momentum generated by the program continued in the stock futures in the afterhours yesterday.

Weak Dollar

The dollar is weaker once again.  This is causing a rally in Asia.  Sentiment from buying in Asia carried to Europe and now to the United States.

The Chart

Please click here for an annotated chart of Dow Jones Industrial Average ETF (DIA).

Note the following:

  •  The stock market is close to the upper band of the resistance zone shown on the chart.  In theory, this shows only a tiny bit more upside before either a pullback or consolidation occurs – this scenario has the highest probability right now.
  • RSI is still on a buy signal but notice that RSI momentum is slowing – the green line on the chart is flattening.  This further argues for the rally slowing, a correction or at a minimum consolidation ahead.

Momo Crowd And Smart Money In Stocks

The momo crowd is aggressivley buying stocks in the early trade.  Smart money is inactive.

Gold

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

The momo crowd is also aggressively selling gold stocks in the early trade.

For longer term, please see gold and silver ratings.

Oil

The API crude inventory number came at a draw of 483K barrels vs. consensus of a build of 3.04 million barrels. We are still digging into it to figure out the reason behind this unexpected huge use of oil.

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

For longer term, please see oil ratings.

Marijuana

The momo crowd is buying marijuana stocks.  Smart money is inactive.

Technical Patterns

Utilities are tracing a hanging man. This is bearish.  ETF of interest is XLU.

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 open strongly higher.  This indicator, with a great track record, is popular among long term investors to stay in tune with the market and among short term traders to independently undertake quick trades.

Interest rates are ticking  up and bonds are ticking down.

The dollar is  weaker.

Gold futures are at $1709, silver futures are at $18.04, and oil futures are $36.84.

S&P 500 futures resistance level is 3110: support levels are 3075, 3000 and  2924.

DJIA futures are up 273 points

BUYING ACROSS THE GLOBE ON WEAKER DOLLAR AND STIMULUS HOPES IN EUROPE

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

Weaker Dollar

The dollar is weaker for the fourth day in a row.  There was a time when Americans took pride in a strong dollar.  The dollar was known as ‘King dollar’. The times have changed.  Prevailing wisdom among the powers that be is to give lip service to a strong dollar but to do everything possible to make the dollar as weak as possible.  The U. S. stock market loves it because S&P 500 is full of companies that are heavily dependent on exports.  The weaker dollar helps them.

Borrowers abroad who have borrowed in dollars love a weaker dollar because they have to pay back less.

Stimulus In Europe

Please click here for a chart of ETF EWG that represents Germany and trades in the U. S.

Note the following:

  • German market has staged a very strong up move over the last 10 days.
  • RSI is very overbought indicating that the German market is vulnerable to a pullback.

The European Central Bank (ECB) apparently thinks that they have not done enough money printing and buying of assets.  The ECB is expected to announce additional 500 billion euros of asset purchases at its meeting Thursday.

The German DAX, equivalent of Dow Jones Industrial Average (DJIA), has jumped over 3%.

Momo Crowd And Smart Money In Stocks

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

Gold

The momo crowd is buying gold in the early trade.  Smart money is inactive.

For longer term, please see gold and silver ratings.

Oil

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

For longer term, please see oil ratings.

Marijuana

The momo crowd is buying marijuana stocks in the early trade. Smart money is inactive.

Technical Patterns

South Korean stocks are forming a bottom triangle. This is bullish.  ETF of interest is EWY.

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 stock market to open strongly higher.  This indicator, with a great track record, is popular among long term investors to stay in tune with the market and among short term traders to independently undertake quick trades.

Interest rates are ticking up and bonds are ticking down.

The dollar is  weaker.

Gold futures are at $1748, silver futures are at $18.68, and oil futures are $36.11.

S&P 500 futures resistance levels are  3075 and  3110: support levels are 3000, 2924 and 2870.

DJIA futures are up 105  points.

MOMO BUYS ACROSS THE GLOBE ON CHINA SHOWCASING U. S. PROTESTS AND WEAK TRUMP RESPONSE

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

Buying Across The Globe

The momo crowd is buying stocks across the globe on China showcasing protests in American cities. Let’s explore with the help of a chart.

The Chart

Please click here for a chart of Hong Kong ETF FXI that trades in the U. S.

Note the following:

  • Hong Kong stocks rallied over 3% on extremely weak  Trump’s response to China power grab.
  • Inspired by the rally in Hong Kong, stocks across Asia and Europe have rallied.
  • China is showcasing protests in U. S. cities.  Chinese propaganda machine has kicked in full gear selectively showing harshness of the police in the U. S. while ignoring the good behavior of the police in the U. S. and contrasting it only with the good behavior of police in Hong Kong and ignoring their bad behavior.
  • The reasoning goes that the U. S. has now lost the moral authority to do anything against China and that is good for stocks across the globe in the very short term.

China Suspends Purchases Of U. S. Farm Goods

China is asking its agencies to suspend purchases of U. S. farm goods.  The trade deal with China is now at risk.  At any other time, this development would have caused a selloff in the U. S. market.  However at this time, the momo crowd is too busy buying into Chinese propaganda with the belief that protests in U. S. cities are good for the stock market.

Protests Hurt Fragile Recovery

Irrespective of the momo crowd buying in the stock market, it stands to reason that when stores have to worry about being looted in addition to coronavirus, this cannot help the confidence level. Confidence is absolutely essential for the recovery of the U. S. economy to proceed.  There is no denying that from a macro economic perspective, the violence accompanying the protests is negative for the economy.

Momo Crowd And Smart Money In Stocks

On Sunday evening, U. S. stock futures opened lower by about 200 Dow points on protests in U. S. cities.   While the media was full of images of new protests, the momo crowd bought stocks aggressively turning futures into positive territory.  The reason was the big rally in Hong Kong as explained above.

As the stock futures rose, smart money slammed the momo crowd by selling. Since then just like the running battle between police and protesters in some cities, in the stock market there is a running battle taking place between the momo crowd buying and smart money selling.  As of this writing it is not clear who is going to win.

As of this writing the momo crowd is buying stocks and smart money is selling stocks.

Gold

There is buying in gold from Asia.

The momo crowd in the U. S. is inactive.

Smart money in the U. S. is lightly buying gold.

For longer term, please see gold and silver ratings.

Oil

The momo crowd is buying oil on the news that OPEC may extend its production cuts.

There is also news that there was only 74% compliance to OPEC production cuts.

Smart money is selling oil in the early trade.

For longer term, please see oil ratings.

Marijuana

The momo crowd is selling marijuana stocks in the early trade still traumatized by weak earnings from CGC last week.  Smart money is inactive.

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.  This indicator, with a great track record, is popular among long term investors to stay in tune with the market and among short term traders to independently undertake quick trades.

Interest rates are ticking up and bonds are ticking down.

The dollar is weaker.

Gold futures are at $1742, silver futures are at $18.55, and oil futures are $30.76.

S&P 500 futures resistance levels are 3075 and  3110: support levels are 3000, 2924 and 2870.

DJIA futures are down 82 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 27% – 35% and short to medium-term hedges of  3% – 8% and short term hedges of 3% – 10%.

 

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.

Please click here to take advantage of a FREE  30 day trial.

Check out our enviable performance in both bull and bear markets.

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