WEEKLY MARKET DIGEST: SLOWEST CHINA GROWTH SINCE 1992, MARIJUANA INSANITY $DIA $GLD $QQQ $SLV $SPY $TBT $USO

WEEKLY MARKET DIGEST: SLOWEST CHINA GROWTH SINCE 1992, MARIJUANA INSANITY $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.

CHINA GDP SLOWEST SINCE 1992, MULVANEY PROBLEM

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

China

China GDP came at 6% vs. 6.1% consensus.  This is the slowest rate since 1992.

Mulvaney Problem

President Trump’s Acting Chief of Staff, Mulvaney, first admits quid pro quo regarding Ukraine but later denies it.  This is giving ammunition to those who want to impeach Trump.

In our analysis this is negative because Wall Street consensus is that Trump will be re-elected.

Momo Crowd And Smart Money In Stocks

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

Gold

The momo crowd is acting like a yo-yo.  Smart money is  inactive.

For longer term, please see gold and silver ratings.

Oil

There is a potential tropical cyclone coming into the Gulf of Mexico.  Oil is rising on the news.  The momo crowd is buying oil.  Smart money is inactive.

For longer term, please see oil ratings.

Marijuana

A Wall Street bank calls CRON the new king because of its relationship with MO.

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

Technical Patterns

Taiwan stocks are tracing an exhaustion bar. This is bearish.  ETF of interest is EWT.

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 down and bonds are ticking up.

The dollar is slightly weaker.

Gold futures are at $1493, silver futures are at $17.54, and oil futures are $54.52.

S&P 500 resistance levels are  3020, 3050 and 3100; support levels are 2950, 2925 and 2918.

DJIA futures are down 28 points.

THE MOST IMPORTANT THING INVESTORS NEED TO KNOW ABOUT BREXIT WITHOUT GETTING EXCITED, MARIJUANA INSANITY

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

Based on the emails I am getting, many investors are getting excited about the Brexit deal. Some excitement is warranted because it took years of wrangling to reach the deal at the last minute. However all is not clear. The Northern Irish party does not support the deal. The opposition Labour is calling for the deal to be rejected. As of this writing, there is no guarantee that the deal will be approved by the U. K. Parliament.

Before getting excited about Brexit, investors ought to know the most important thing about Brexit from the chart.

The Chart

Please click here for an annotated chart of S&P 500 ETF (SPY). Similar conclusions can be drawn from charts of Dow Jones Industrial Average (DJIA) and Nasdaq 100 ETF (QQQ).

Note the following:

  • The chart shows the trend line for the U. S stock market.
  • The chart shows Arora call that Brexit might happen. This call came at a time when Wall Street consensus was that Brexit would not happen.
  • Wall Street was proven wrong when U. K. voters voted for Brexit.
  • Wall Street’s call was that stocks would go down. The Arora Report call was that stocks would go up and the dip was a buying opportunity.
  • The European Union (EU) is the largest trading partner for the U. K. In 2017, 53% of all U. K. imports were from the EU and 44% of all U. K. exports were to the EU.
  • U. K. is a big trading nation.
  • Investors ought to keep in perspective that U. K. is no longer the big giant it once was in terms of its economic impact on the world.   The United States GDP is about $21 trillion, China GDP is about $15 trillion and the U. K. is about $3 trillion.
  • London is the center of international banking.

The Most Important Point

The most important point for investors is the trend line shown on the chart. The stock market did not fall below the trend line when Brexit was first announced.   During all the wrangling over the years, the stock market did not fall due to Brexit issues. Now, isn’t it unreasonable to assume that the stock market will go up because of the Brexit deal?

The Brexit deal is positive and certainly creates positive sentiment. However in the end, it is not material for most investors.

There may be certain isolated opportunities in U. K. stocks and our plan is to take advantage of such opportunities.

Instead of Brexit, investors ought to focus on price action in Netflix (NFLX) after the earnings. Overall Netflix earnings are showing cracks. If the same earnings were reported almost any time in the past Netflix stock would have fallen. However as of this writing, Netflix stock is moving up because earnings were better than the worst fears and also on short covering.  Smart money is not buying into the bounce so far. It is the momo (momentum) crowd and short squeeze causing the buying.

Instead of Brexit investors ought to stay focused on the price action in mega caps such as Apple (AAPL), Amazon (AMZN), Facebook (FB) and Google (GOOG) (GOOGL).

Semiconductor stocks are often an early indicator. Popular semiconductor stocks such as Intel (INTC), AMD (AMD), Micron (MU) and Nvidia (NVDA) are showing resilience.

Jobless Claims

Initial Jobless Claims came at 214K vs. 21K consensus.

Industrial Production

Industrial Production came at -0.4% vs. -0.3% consensus.

Momo Crowd And Smart Money In Stocks

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

Gold

The momo crowd is buying gold.  Smart money is inactive.

Oil

API data showed a build of 10.45 million barrels vs. consensus of a build of 2.88 million barrels.  This is highly bearish for oil.

The momo crowd is selling oil.  Smart money is inactive.

Marijuana

Insanity started in marijuana stocks in after hours trading and is continuing as of this writing.  There has been intense buying lead by CRON.

The momo crowd is aggressively buying marijuana stocks.  Smart money is lightly selling into the strength.

We will do a separate post.

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 higher on Brexit.  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 slightly weaker.

Gold futures are at $1494, silver futures are at $17.52, and oil futures are $52.98.

S&P 500 resistance levels are  3020, 3050 and 3100; support levels are 2950, 2925 and 2918.

DJIA futures are up 65 points.

CHINA THREATENS RETALIATION, WEAK RETAIL SALES

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

China Threatens

The U. S. House of Representatives passed a bill asking government departments to consider if political developments in Hong Kong require a change in Hong Kong’s special trading status.  The bill is designed to provide support to Hong Kong protesters.  Now China is threatening retaliation.

Ag Purchases

Serious concerns are developing as to whether China will really buy all of the additional promised agricultural goods from the U. S.  China has made significant investments in Brazil and other countries and may not have the need to buy as much in agricultural products as hyped.

All of the above should be negative for the stock market but the stock market is driven by the momo crowd that acts only on the headlines without digging deep.  So far the momo crowd appears to be oblivious to these important issues with China.

Retail Sales

September Retail Sales Ex-auto came at -0.1% vs. +0.2% consensus.

In our analysis, this weakness is unexpected.  The U. S. economy has been propped up by the consumer.  This data is potentially a sign that the consumer may not be as strong as generally believed by the stock market.  This is another reason not to become too aggressive in buying stocks as the stock market approaches the old high.

Earnings

So far important earnings released in stocks such as UAL and BAC since yesterday morning are better than expected.

Momo Crowd And Smart Money In Stocks

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

Gold

The momo crowd was aggressively selling gold going into the release of retail sales.  Weak retail sales indicate higher gold prices.  The momentum in gold reversed to the upside after retail sales data was released.  Now the momo crowd is aggressively buying gold.  Of some concern is that gold is still below $1500.

Smart money is inactive.

Oil

The momo crowd is acting like a yo-yo in oil.  Smart money is inactive.

Marijuana

The momo crowd is buying marijuana stocks.  A note of caution, momo crowd buying is nowhere near as strong as would have been expected after APHA news: this is a negative.

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 rate are ticking down and bonds are ticking up.

The dollar is slightly weaker.

Gold futures are at $1493, silver futures are at $17.42, and oil futures are $52.88.

S&P 500 resistance levels are  3020, 3050 and 3100; support levels are 2950, 2925 and 2918.

DJIA futures are down 46 points.

ENCOURAGING EARNINGS THIS MORNING, LOWER GLOBAL GROWTH, MARIJUANA SURPRISE, TURKEY SANCTIONS

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

Encouraging Earnings

Earnings parade has started.  Several big companies reported earnings this morning.

JPM, JNJ and UNH reported earnings better than the consensus and whisper numbers.  GS and WFC reported earnings less than the consensus and whisper numbers.  We are still analyzing the earnings of C.

Lower Global Growth

IMF has lowered its global growth projections to 3% in 2019 down from 3.3% projection it made in April.

IMF Warning

The IMF is warning that central banks have very little ammunition left to fight a recession.

Turkey Sanctions

Trump is imposing sanctions on Turkey.  Paradoxically Turkish stocks are going up on Trump’s sanctions.

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 selling gold in the early trade. Smart money is inactive.

Oil

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

Marijuana

Lately there has been a trend of marijuana companies reporting really bad earnings.  This morning there is a surprise from APHA.  APHA reported earnings better than consensus and the whisper numbers.

The momo crowd is aggressively buying marijuana stocks.  Smart money is also lightly buying marijuana stocks.

Technical Patterns

Turkish stocks are tracing a megaphone top.  This is bearish.  ETF of interest is TUR.  However be extremely careful because Turkish stocks are going up on new sanctions, they were supposed to go down.

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 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 down and bonds are ticking up.

The dollar is slightly stronger.

Gold futures are at $1497, silver futures are at $17.62, and oil futures are $53.48.

S&P 500 resistance levels are  3020, 3050 and 3100; support levels are 2950, 2925 and 2918.

DJIA futures are up 117 points.

THE TRADE DEAL GAME PLAN AFTER CHINA AND WALL STREET APPEAR TO HAVE WON THIS ROUND

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

First and foremost I am politically agnostic. My sole job is to help investors. On the surface it appears that China and Wall Street won this round of the trade deal. Who lost? It appears that the loser is America. China has taken advantage of America over the last 40 years. Let’s explore the game plan for investors with the help of a chart.

The chart

Please click here for an annotated chart of Dow Jones Industrial Average (DJIA) ETF (DIA).   I am using Dow Jones Industrial Average ETF because emails I receive from investors are asking for Dow Jones Industrial Average levels. Very little money is tied to Dow Jones Industrial Average. Most money is tied to S&P 500 (SPX). For this reason, investors ought to use a chart of S&P 500 ETF (SPY). Those with portfolios that are heavy in technology should also keep an eye on the chart of Nasdaq 100 ETF (QQQ).

Note the following:

  • The chart shows the highest probability zone on the upside if there is a breakout on good news either on the trade front or from earnings.
  • The chart shows the highest probability zone without a breakout.
  • The chart shows the Arora buy signal.
  • RSI shows the market can go either way.
  • The chart shows the volume is higher on down days. This indicates high risk in this stock market.
  • The details of phase one of the trade deal are missing. Therefore it is not possible to draw a definite conclusion.
  • The Trump administration is calling the deal substantial but it is difficult to see how China did not get the better of Trump.
  • China has agreed to buy up to $50 billion of U. S. agricultural goods. This amount is only about $25 billion more than what China would have bought without a trade deal. China needs these agricultural products to feed its population.
  • On the U. S. side, this is a minuscule amount for the U. S. economy.
  • It does help Trump with farmers in his re-election.
  • There is much said about China agreeing to currency transparency. Trump has been overplaying that China devalues its currency to gain an advantage in exports.
  • The reality of the currency is that every time the yuan goes lower, capital outflows from China increase. China does not want capital outflows. For this reason, it is in China’s own best interest to keep its currency stable.
  • On the surface, the currency deal does not appear to give the U. S. any advantage.
  • Chinese exports to the U. S. in September fell about 22% year over year. This is the result of the tariffs. China cannot afford higher tariffs. But in this phase one trade deal, China succeeded in Trump removing the tariffs that were supposed to go into effect on October 15.
  • Removing the October 15 tariffs reduces pressure on China to strike a better deal for the U. S.
  • The real issues of technology transfer, state subsidies and structural changes are not part of this deal.
  • Wall Street wins because Wall Street is myopic and they just want the stock market to go up in the short term

The game plan

Investors ought to pay attention to the highest probability zone without a breakout shown on the chart. The most probable scenario is that the stock market will stay range bound in this zone unless there is more news.

Investors ought to carefully watch the stock of Apple (AAPL) because Wall Street has assumed that all is clear with China.

Investors ought to also watch the stocks of Facebook (FB), Amazon (AMZN) and Google (GOOG) (GOOGL) because of the severe headwinds that these stocks may face if Elizabeth Warren beats Trump. Price action in these stocks shows that Wall Street believes Trump will win the re-election.

Investors ought to carefully watch semiconductor stocks such as XLNX, AMD (AMD), Intel (INTC) and Micron (MU) because of their heavy dependence on China and semiconductor stocks are often a leading indicator.

Investors should also keep an eye on gold ETF (GLD) and silver ETF (SLV). Right now the price action in gold and silver indicates that all is clear for stocks.

Don’t be fooled

Don’t be fooled by Wall Street’s reaction and positioning. Do you remember that Wall Street proclaimed Hillary Clinton was going to win? Do you remember Wall Street proclaimed that the stock market would fall if Trump was elected?

Momo Crowd And Smart Money In Stocks

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

Gold

The momo crowd is acting like a yo-yo in gold.  Smart money is inactive.

Oil

The momo crowd is buying oil.  Smart money is inactive.

Marijuana

The momo crowd is buying marijuana stocks.  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 neutral because we cannot predict the news flow with any degree of confidence.  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.

The bond market is closed.

The dollar is slightly stronger.

Gold futures are at $1495, silver futures are at $17.55, and oil futures are $53.54.

S&P 500 resistance levels are  3020, 3050 and 3100; support levels are 2950, 2925 and 2918.

DJIA futures are down 66 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 22% – 32% and short to medium-term hedges of  5% – 15% and short term hedges of 5% – 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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