WEEKLY MARKET DIGEST: SHORT SQUEEZE IN STOCKS, BONDS AT DANGEROUS LEVEL, NEXT TELL ON GOLD AND BITCOIN $DIA $GLD $QQQ $SLV $SPY $TBT $USO

WEEKLY MARKET DIGEST: SHORT SQUEEZE IN STOCKS, BONDS AT DANGEROUS LEVEL, NEXT TELL ON GOLD AND BITCOIN $DIA $GLD $QQQ $SLV $SPY $BTC.X $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.

SHUTDOWN DRAMA, YIELD RISES TO A DANGEROUS LEVEL, DOLLAR WEAKEST IN THREE YEARS, SHALE PRODUCTION SET TO EXPLODE

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

Shutdown Drama

Republicans in the Senate do not seem to have the votes to pass the spending bill as of this writing. There will be a lot of horse trading today to prevent the government shutdown.  The market is assuming that a deal will be reached.  Neither side wants a shutdown.  However this is a small risk factor that investors ought to take into account going into today’s trading.

The market is likely to move intraday on rumors regarding a potential deal.

If a deal is not reached and the market falls, this will be a buying opportunity.

Yield Rises To A Dangerous Level

Yield on 10-year Treasuries has risen as high as 2.64%.  In our view, 2.6 – 2.7 is a critical zone.  If the yield rises above 2.7%, it will put significant pressure on the stock market.

Weak Dollar

By some measures, the dollar is the weakest in three years.  If a deal is reached in Washington, the dollar may bounce.

Gold

Gold trades inverse to the dollar.  Gold is rising as dollar weakens.

Shale Production Set To Explode

In its latest report, IEA says that U. S. shale oil production is set to explode.  This is putting significant pressure on oil.  OPEC is meeting this weekend.  Oil bulls are hoping for positive news.

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 but expect the market to open positive.  The direction of the market will be determined by rumors regarding the shutdown.

Gold futures are at $1334, silver futures are at $17.03, and oil futures are $63.05.

S&P 500 resistance levels are 2800 and 2840; support levels are 2765, 2740, and 2700.

DJIA futures are up 30 points.

MASSIVE SHORT SQUEEZE, 244% RETURN NOT LIKELY, GOLD AND OIL UNDER PRESSURE, BITCOIN BOUNCES

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

Massive Short Squeeze

According to our algorithms more than half of yesterday’s big rise in the stock market was due to a short squeeze. The momo crowd was aggressively buying but smart money was inactive.

244% Return

The pace at which the Dow has moved from 25000 to 26000 would mean 244% return for the year if market continues to move at this pace. It is not likely, don’t get too excited.

Gold

In yesterday’s Morning Capsule we shared with you that rallies in gold keep on failing.  Another rally failed and temporarily the momo crowd appears to have given up.  For this reason gold is falling.

Oil And Natural Gas

OPEC is out with a report that shale producers are increasing production.  This is putting pressure on oil.

Short squeeze continues in natural gas.

EIA will be released at 10:30 am and 11:00 am.

Bitcoin Bounce

Our call yesterday to expect a bitcoin bounce is spot on. What happens next will be a tell.

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.

Interest rates are ticking up and bonds are ticking down.

Some strength is coming into the dollar.

Gold futures are at $1329, silver futures are at $17.07, and oil futures are $60.00.

S&P 500 resistance levels are 2800 and 2830; support levels are 2765, 2740, and 2700.

DJIA futures are down 7  points.

SPOT ON SIGNAL AHEAD OF UGLY REVERSAL SELL OFF BUT MOMO IS BACK, THE NEXT TELL ON GOLD AND BITCOIN

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

Spot On Signal In Advance Of Ugly Sell Off

Yesterday stocks traced an ugly reversal pattern with heavy selling.  The last time such a pattern was seen was in August of 2017.  Normally such a pattern is negative for the stock market in traditional technical analysis.  In extended markets, such a pattern is often also the top.

Yesterday’s Morning Capsule gave you a spot on signal ahead of the sell off. In the Morning Capsule we wrote:

The momo crowd is aggressively buying stocks in the early trade pushing Dow futures to over 26000.   The thinking is that mom and pop were sending money to mutual funds this weekend like the previous weekend.  Traders are simply trying to get ahead of the mutual fund buying.

Beware That Dollar Has Reversed

Another leg up in the rally was caused by weaker dollar.  U. S. multi national earnings go up when the dollar is weak.

Beware that the dollar has reversed over the last hour or so after persistent weakness last week and over the weekend.

It is likely that the ‘smart money’ will sell into the strength if the dollar strength continues.

Our very, very short term stock market indicator was also spot on.  We wrote ahead of the sell off:

Our very, very short-term early stock market indicator is negative relative to Dow futures over 26000 but is positive relative to close of the market last week. In other words, the indicator is saying that early strength may not last.

The Reversal Pattern

Please  click here  to see the reversal pattern.  First DJIA was up over 280 points and then it fell over 350 points before recovering.

Momo Is Back

The momo crowd is back buying stocks aggressively again in the early trade.  The ‘smart money’ is inactive.  Just like yesterday, after being weak earlier, dollar is beginning to strengthen on verbal intervention by European Central Bank (ECB).

Tell On Gold

The momo crowd is aggressively buying gold and silver but since yesterday morning sell off,  rally attempts have been failing.  If rally attempts continue to fail, this will be a bearish tell.  Please see a separate post titled, SIGNAL QUALITATIVE: CURRENT GOLD AND SILVER RATINGS, AND ALLOCATION, REVIEWED DAILY AFTER THE ORIGINAL PUBLICATION.  This is a sticky post on the home page.

Tell On Bitcoin

Bitcoin futures have fallen below $10,000 as of this writing.  Expect a very, very short-term rally.  If the rally is sustained or fails, either will be a tell because  $10,000 is a critical level both based on traditional technical analysis and also from sentiment point of view.  Will those who bough it at $20,000 or anywhere in between panic and sell?

Industrial Production

Industrial Production came at 0.9% vs. 0.4% consensus.

Capacity Utilization came at 77.9% vs. 77.3% consensus.

These numbers indicate that manufacturing continues to do well in the United States.  This is positive for industrial stocks.  However industrial stocks are very over bought.  As a full disclosure, subscribers to ZYX Global Allocation have been sitting on very large unrealized gains on SPHB which has a heavy weighting of industrial stocks.  Yesterday partial profits were taken.

Oil And Natural Gas

Short squeeze in oil continues to abate leading to selling pressure.

There is a new leg of short squeeze in natural gas.

Technical Patterns

Mexican stocks are tracing a Diamond Bottom. This is bullish.  ETF of interest is EWW.

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 stocks to start the day much higher.  Expect the momo crowd to take another shot at DJIA 26,000.

Bonds are ticking down and interest rates are ticking up.

Gold futures are at $1336, silver futures are at $17.19, and oil futures are $63.66.

S&P 500 resistance level is 2800; support levels are 2765, 2740, and 2700.

DJIA futures are up 125 points.

MOMO SENDS DOW OVER 26000 BUT BEWARE AS DOLLAR REVERSES, BITCOIN PLUNGES

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

Dow 26000

Persistent weakness in the dollar over the long weekend was pushing stocks higher overseas.

The momo crowd is aggressively buying stocks in the early trade pushing Dow futures to over 26000.   The thinking is that mom and pop were sending money to mutual funds this weekend like the previous weekend.  Traders are simply trying to get ahead of the mutual fund buying.

Beware That Dollar Has Reversed

Another leg up in the rally was caused by weaker dollar.  U. S. multi national earnings go up when the dollar is weak.

Beware that the dollar has reversed over the last hour or so after persistent weakness last week and over the weekend.

It is likely that the ‘smart money’ will sell into the strength if the dollar strength continues.

Bitcoin Plunges

Bitcoin has plunged about 20% on concerns of the crackdown in China.

Gold

Gold ran over $1344 on dollar weakness over the weekend but now has pulled back to $1334 as the dollar has strengthened.

Oil And Natural Gas

Signs of short squeeze about to abate are emerging in oil and natural gas.  Short squeeze has been a major reason for the recent rise.

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 relative to Dow futures over 26000 but is positive relative to close of the market last week. In other words, the indicator is saying that early strength may not last.

Bonds and interest rates are also reversing with the dollar.

Gold futures are at $1334, silver futures are at $17.10, and oil futures are $63.95.

S&P 500 resistance level is  2800; support levels are 2765, 2740, and 2700.

DJIA futures are up 201  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%.

 

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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