WEEKLY MARKET DIGEST: SMART MONEY PROFITING FROM COMEY AND U. K. TURMOIL, MOMO LOSES IN GOLD, OIL PLUNGE $DIA $GLD $QQQ $SLV $SPY $TBF $TBT $USO

WEEKLY MARKET DIGEST: SMART MONEY PROFITING FROM COMEY AND U. K. TURMOIL, MOMO LOSES IN GOLD, OIL PLUNGE $DIA $GLD $QQQ $SLV $SPY $TBF $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.

MOMO BUYING STOCKS ON TURMOIL IN U. K., YEN AND GOLD BEING SOLD

This is what you need to know today.

U. K. Turmoil

U. K. election results were not what Prime Minister May had expected when she called for the flash election.  She had expected her majority in the Parliament to increase by 100 members. Instead she lost 12 members. Her survival is in question.

Momo Buys Stocks

The momo crowd is aggressively buying stocks this morning.  This is happening in Europe including the U. K., and the U. S.

Interestingly the ‘smart money’ was buying yesterday near the lows.  There is no buying by the smart money this morning.  We would not be surprised if the smart money sold into the strength generated by the momo buying.

Currencies

The pound is being heavily sold.  Dollar is stronger. Money is flowing out of the safe haven of yen.

Gold

Our signal to you that smart money was selling gold the day before yesterday was when gold was near its highs and about $28 higher than where it is as of this writing.  Please click here to see the timing.

Now that gold has fallen, momo crowd is panicking and selling.  This is the same momo crowd that was aggressively buying $20 higher.

We would not be surprised to see the smart money take profits on short sells made in the last two days.

Technical Patterns

Several financial stocks are tracing a Continuation Diamond.  This is a bullish pattern.  ETFs of interest are , , and .

Several REITs are tracing a Hanging Man.  This is a bearish pattern.  ETF of interest is .

This is powerful information and many investors use this to enter trades in addition to our official signals.  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.

Oil is recovering.

Bonds are lower and interest rates are higher.

Gold futures are at $1273, silver futures are at $17.29, and oil futures are $45.59.

S&P 500 resistance levels are 2450 and 2500; support levels are 2425, 2400, and 2363.

DJIA futures are up 30 points.

 

ECB SAYS NO MORE RATE CUTS, WAIT FOR COMEY AND U.K. ELECTIONS, SMART MONEY SELLING GOLD, OIL PLUNGES

This is what you need to know today.

ECB Says No More Rate Cuts

In a big change European Central Bank (ECB) says there will be no more rate cuts.  This is an acknowledgement that the economic data in Europe has been strong.

Wait For Comey And U. K. Elections

Big players are sidelined waiting for Comey and U. K. election results.

Prepared testimony of Comey does not accuse Trump of obstruction of justice.  We will be carefully watching Q&A and let you know if an action needs to be taken.

Smart Money Selling Gold

Yesterday afternoon we alerted you when the ‘smart money’ started selling gold.  The smart money continues to lightly sell gold.

It is of interest that the smart money started selling gold ahead of key events that can potentially propel gold higher.

The smart money is not always right especially since the selling is light.  Having said that, carefully watching the smart money actions is one of the best indicators available to any investor.

Oil Plunges

Oil plunged after EIA data showed a build in oil and gasoline higher than the consensus.

Jobless Claims

Initial Jobless Claims came at 245K vs. 240K consensus.  This is a leading indicator and carries a heavy weight in our timing models.

Technical Patterns

None of note.

This is powerful information and many investors use this to enter trades in addition to our official signals.  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, it depends on the news.

Interest rates, bonds and currencies are range bound.

Gold futures are at $1284, silver futures are at $17.60, and oil futures are $45.35.

S&P 500 resistance levels are 2450 and 2500; support levels are 2425, 2400, and 2363.

DJIA futures are up 3 points.

SMART MONEY ACTIONS IN STOCKS, GOLD, OIL AND BONDS; INDIA HOLDS RATES

This is what you need to know today.

Four Events

Four events are sending investors out of stocks into the safety of gold, yen and bonds. How do I know this? I am looking at money flows. Market reaction to Brexit and Trump election is more than ample proof that investors do not come out ahead just by analyzing the events and making predictions about the markets based on the prevailing wisdom. As an example, the prevailing wisdom was that if Trump got elected, stock market would plunge. Initially Dow Jones Industrial Average futures (YM_F) did plunge 700 points and since then the market has staged an impressive rally.

The tool I am going to share with you so that you do not fall victim to the prevailing wisdom is to look at money flows. Due to the importance of the money flows to investors, let us explore them first before delving into the four important events.

Money flows

Please click here for tables of important money flows. I have been watching and investing based on money flows for a very long time. Long ago I concluded that investing and trading on money flows alone did not give me the edge I was seeking. This led to the multi-year quest of developing algorithms to dissect money flows into various segments. Money flows from the following three segments are the most important.

  • Smart money
  • Momo crowd
  • Short squeeze

The tables linked above show current money flows for each of these three segments for stocks, gold, oil and bonds.

Now that you have been exposed to a better way of looking at money flows, you too can appreciate the impact of the four events with a new perspective that is likely to generate more profits for you and limit losses. Here are the four events:

Qatar crisis

Qatar is a small but strategically located Arab nation.  It is different from most of the Arab population in that majority of its citizens follow Salafi Muslim movement and it has close relations with Iran.

The news is that Saudi Arabia, Bahrain, UAE and Egypt have cut off diplomatic relations with Qatar.  They claim that Qatar is supporting terrorism.

The news started an avalanche of buying in gold from the Middle East.

Qatar itself is not a major oil exporter but is a big exporter of liquefied natural gas.  Brent crude oil, the standard in Europe, initially moved up on the news.

WTI crude, the standard in the United States, did not initially see as much buying as Brent. When the buying did not continue, bears took charge with waves of aggressive selling attempting to break support at $47. Every time the support broke, significant buying came in right under $47. This price action is leading to a short squeeze in oil as of this writing.

Comey testimony on Thursday

Fired FBI Director James Comey will testify in front of the Congress on Thursday. There is no telling exactly what he will say and how his testimony will affect Trump’s agenda.

ECB meeting on Thursday

European Central Bank (ECB) meets on Thursday. There is considerable uncertainty about the outcome.

British election on Thursday

Polls have narrowed going into the British election on Thursday. This is causing considerable nervousness in international markets. Money is flowing into Treasury bonds and Japanese currency yen.

India Interest Rates

The Reserve Bank of India left its benchmark interest rate at 6.25%.   The central bank chose not to cut interest rates to stimulate growth.

As a full disclosure, ZYX Emerging and ZYX Global have positions in India.

Technical Patterns

Many biotech stocks are tracing an Inside Bar.  This is bearish.  ETFs of interest are , , and .

Many consumer staple stocks are tracing an Inside Bar.  This is bearish.  ETF of interest is XLP.

This is powerful information and many investors use this to enter trades in addition to our official signals.  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.

Gold futures are at $1292, silver futures are at $17.61, and oil futures are $47.62.

S&P 500 resistance levels are 2450 and 2500; support levels are 2425, 2400, and 2363.

DJIA futures are up 1 points.

FOUR EVENTS SENDING INVESTORS TO SAFETY OF GOLD, YEN AND BONDS; MONEY FLOWING OUT OF STOCKS

This is what you need to know today.

Four Risk Off Events

Four risk off events are sending investors to the safety of gold, yen and bonds.  Money is flowing out of stocks.  Here are the four events.

  • Qatar crisis —please see yesterday’s Morning Capsule.
  • Comey testimony on Thursday.
  • ECB meeting on Thursday.
  • British election on Thursday.

Stocks

Yesterday late afternoon money started flowing out of stocks.  Money continues to flow out this morning.

The ‘smart money’ is lightly selling stocks.

Gold

Yesterday there was considerable buying from the Middle East.  The momo crowd has latched on to the price action in gold yesterday and is now buying aggressively.  As is usually the case when gold rises, gurus of the momo crowd are proclaiming that the next big bull market in gold has just started.  It is worth noting that these gurus have called the start of a new major bull leg in gold over 50 times during the last five years.  One of these days they will be right.

There is no buying in gold by the smart money.

In our analysis, future direction of gold will depend on what happens this Thursday.  There is no way to predict with certainty the outcome of the events described above.

Oil

Several times yesterday oil attempted to break $47.  Every time  significant buying came in right under $47.

Technical Patterns

Several material stocks traced an Inside Bar.  This is bearish.  ETFs of interest are and .

This is powerful information and many investors use this to enter trades in addition to our official signals.  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.

There is significant buying in yen.

There is significant buying in bonds, interest rates are ticking down.

Gold futures are at $1294, silver futures are at $17.67, and oil futures are $47.27.

S&P 500 resistance levels are 2450 and 2500; support levels are 2400, 2363, and 2334.

DJIA futures are down 46  points.

GOLD AND OIL SUPPORTED BY NEW QATAR CRISIS BUT STOCKS AND BONDS IGNORE IT

This is what you need to know today.

New Qatar Crisis

Qatar is a small but strategically located Arab nation.  It is different from most of the Arab population in that majority of its citizens follow Salafi Muslim movement and it has close  relations with Iran.

The news is that Saudi Arabia, Bahrain, UAE  and Egypt have cut off diplomatic relations with Qatar.  They claim that Qatar is supporting terrorism.

Gold

Gold is supported by the news of the crisis.  There is a lot of buying coming from the Middle East.

Oil

Qatar itself is not a major oil exporter but is a big exporter of liquefied natural gas.  Brent crude oil, the standard in Europe, moved up on the news.

WTI crude, the standard in the United States, is not seeing as much buying as Brent.

Stocks And Bonds Ignore Qatar

While gold and oil are paying a lot of attention to Qatar, stocks, bonds and currencies are ignoring the crisis.

Technical Patterns

Several Chinese internet stocks are tracing a Flag Pattern.  This is bullish.  ETF of interest is .  ZYX Allocation has a position in with very nice unrealized gains and ZYX Buy has a position in .

Several semiconductor stocks are tracing a Hanging Man.  This is a bearish pattern.  ETF of interest is .  ZYX Allocation has a position in and very large unrealized gains at this time.  ZYX Buy has several positions in the semiconductor sector with nice gains. Most notable is with a very large gain.

This is powerful information and many investors use this to enter trades in addition to our official signals.  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.

Currencies are range bound.

Gold futures are at $1284, silver futures are at $17.54, and oil futures are $47.27.

S&P 500 resistance levels are 2450 and 2500; support levels are 2425, 2400, and 2363.

DJIA futures are down 16  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 27 – 38% of assets in cash or treasury bills, and short to medium-term hedges of  25% and very short term hedges of 5%.

 

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