WEEKLY MARKET DIGEST: SMART MONEY SELLS THE RALLY ON CHINA TRADE DEAL, CONSERVATIVES BEAT LIBERALS IN U. K. $DIA $GLD $QQQ $SLV $SPY $TBT $USO

WEEKLY MARKET DIGEST: SMART MONEY SELLS THE RALLY ON CHINA TRADE DEAL, CONSERVATIVES BEAT LIBERALS IN U. K. $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.

MOMO BUYS ON TRADE DEAL AND ELECTION WIN IN U. K. BUT CHINA CALL AHEAD

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

Trade Deal

Trump has approved the phase one of the trade deal.  However there is conflicting information from China. China will hold a press conference at 9:30 am ET and that will determine what happens next in the stock market.

Historic U. K Win

In the U. K.,  Boris Johnson has scored a big historic victory trouncing labour.  There are implications for the United States and the stock market.  We will do a separate post.

Momo Crowd And Smart Money In Stocks

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

Gold

The momo crowd is lightly selling gold.  Smart money is inactive.

For longer term, please see gold and silver ratings.

Oil

The momo crowd is aggressively buying oil.  Smart money is selling into the strength.

For longer term, please see oil ratings.

Marijuana

Ontario plans to remove limits on cannabis retail stores.  This is positive for marijuana stocks such as CGC, ACB, TLRY and APHA.

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

Technical Patterns

Energy stocks are tracing a diamond bottom. This is bullish. ETF of interest is XLE.

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 indeterminate because of the pending news.  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.

Bonds were sold on Trump approval of the trade deal but are being bought as of right now.

The dollar was bought on trade deal but is being sold on U. K. election.

Gold futures are at $1473, silver futures are at $16.97, and oil futures are $59.84.

S&P 500 resistance levels are  3200 and 3225; support levels are 3143, 3125 and 3100.

DJIA futures are up 20 points.

SUPPLIMENT: STOCKS ROCKET ON TRUMP TWEET

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

Trump Tweet  

Trump tweeted that China and U. S. are getting “Very close to a deal.”  There is an independent report that the U. S. is offering not only concessions on the upcoming tariffs but also existing tariffs.  Apparently the U. S. is proposing to cut tariffs in half.

Also there is a rumor that China has agreed to Trump’s demands to buy pork and soybeans but is refusing to put it in writing.

Here is an instructive look below the surface as a result of Trump’s tweet.  Let’s start with a chart.

The Chart

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

Note the following:

  • The chart shows a strong up move in the stock market after Trump’s tweet.
  • Th most important thing to not from the chart is the VUD indicator.  VUD indicator is the most sensitive measure of net supply and demand in real time.  Orange shows net selling and green shows net buying.
  • The VUD indicator shows that there is quite a bit of selling as the prices have moved up.  This indicates that many investors are selling into the strength.
  • The volume has picked up after Trump’s tweet.  This is a positive.

Money Flows

Segmented money flows provide an x-ray of the stock market giving an edge to prudent investors.  Here are the money flows after Trump’s tweet.

  • The momo crowd is aggressively buying stocks.  Smart money is lightly selling into the strength.
  • The momo crowd is aggressively buying popular large-cap stocks such as Apple (AAPL), Google (GOOG) (GOOGL), Facebook (FB) and Amazon (AMZN).  The momo crowd is also aggressively buying semiconductor stocks such as AMD (AMD), Micron (MU), Intel (INTC) and Skyworks (SWKS).
  • The momo crowd is aggressively selling gold.  Smart money is inactive.
  • The momo crowd is aggressively buying oil.  Smart money is selling oil.
  • The momo crowd is aggressively selling bonds.  Smart money is inactive.
  • The dollar is being bought on the news.

Trick?

Could this be a trick to negotiate better with the Chinese and also run up the stock market at the same time?

Second Reaction

The first reaction is positive for stocks.  On well telegraphed issues, the first reaction is often wrong.  After the initial surge, normally there would be a high probability of a ‘sell-the-news’ reaction.  However this is December.  Performance chase is on.  In performance chase, lagging money managers aggressively buy wining stocks to catch up to their benchmarks.

Tail Risks

At this time it is important take notice that the smart money is protecting against tail risks.  Please see yesterday’s Morning Capsule.

FED MORE DOVISH THAN EXPECTED, ECB UPS INFLATION OUTLOOK, NEGATIVE CORE PPI, TARIFF WORRIES

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

Fed

Everybody expected the Fed to be dovish but Powell’s press conference shows that the Fed is even more dovish than expected.

In our analysis the danger in the Fed’s dovishness is that inflation may raise its ugly head.

ECB

The European Central Bank (ECB) left its policy unchanged.  ECB ups its inflation outlook by 10 basis points.

Tariff Worries

Market is eagerly awaiting news on tariffs that are scheduled to go into effect on December 15th.

PPI

Core Producer Price Index (PPI) came at -0.2% vs. +0.2% consensus.

Initial Claims

Initial Claims came at 252K vs. 212K consensus.

Momo Crowd And Smart Money In Stocks

There is no discernable momo crowd or smart money activity in the early trade.

Gold

Gold is running on extra dovish Fed.  The momo crowd is aggressively buying gold.  Smart money is inactive.

For longer term, please see gold and silver ratings.

Oil

The momo crowd is buying oil.  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

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 indeterminate due to trade related news and rumors but expect the market to open slightly lower.  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 and bonds are mixed.

The dollar is range bound.

Gold futures are at $1486, silver futures are at $17.04, and oil futures are $58.96.

S&P 500 resistance levels are  3200 and 3223; support levels are 3125, 3100 and 3050.

DJIA futures are down 27 points.

IGNORE THE FED — DOW 30,000 TARGET BUT FOCUS ON TAIL RISKS

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

The Fed Day

The Fed will announce its decision at 2:00 pm ET. The consensus is that nothing significant will come out of this decision.

Tail Risks

The momo (momentum) crowd is in control of the stock market, the Fed has surrendered to Trump, performance chase is on and the fate of the market rests on what Trump does with trade.

There is new information about the stock market that all prudent investors should heed. Let’s explore with the help of a chart.

The Chart

Please click here for an annotated chart of ETF (DIA) that represents Dow Jones Industrial Average (DJIA). For the sake of full transparency, this chart was previously published and no changes have been made. Similar conclusions can be drawn from charts of S&P 500 ETF (SPY) and Nasdaq 100 ETF (QQQ).

Note the following:

  • From the chart, the first target for the stock market is Dow Jones Industrial Average 30,000.
  • From the chart, the second target for Dow Jones Industrial Average is over 32,000.
  • When I gave a “buy” signal on Donald Trump’s election at a time when many were predicting a big stock market drop, it was at first met with incredulity. When shortly thereafter I called for a high-probability scenario of the Dow Jones Industrial Average hitting 30,000 points in Trump’s first term, I received a ton of hate mail. I have subsequently repeated that call in Trump’s first term several times.  Now, a few years later, Dow 30,000 calls are commonplace
  • Normally we put a lot of emphasis on the Fed. But now, at least temporarily, the Fed has surrendered to Trump and likely to lay low as long as inflation remains under control. November Core Consumer Price Index (CPI) month-over-month came at 0.2% vs. 0.2% consensus. The headline number was 0.3% vs. 0.2% consensus. The headline number was a little bit hot but investors should focus on the core number. Also keep in mind that although the stock market pays a lot of attention to CPI, the Fed watches many other indicators and it is well known that this is not the Fed’s favorite indicator.
  • Performance chase is on. In performance chase, lagging money managers aggressively buy to catch up with their benchmarks.
  • Smart money flows are rising in inverse ETFs. This indicates increased hedging.
  • Option trading patterns are also showing increased hedging especially in popular stocks such as Apple (AAPL), Amazon (AMZN), Facebook (FB) and Google (GOOG) (GOOGL).
  • There also appears to be increased hedging in semiconductor stocks such as AMD (AMD), Qorvo (QRVO), Micron (MU) and Intel (INTC).

What does it all mean?

While significant complacency has seeped into the stock market, smart money appears to be hedging more against potential tails risks. In plain English, tail risks mean risks that have a low probability of occurring but if they occur, they can move the stock market a lot. Prudent investors should heed this new information and guard against tail risks. Due to market complacency, hedging is now less expensive especially if some of it is done with near zero cost strategies. For those who want to keep it simple, holding more cash is the way to go.

Caution

To be absolutely clear, this is not a sell signal. We continue to hold good long term positions and continue to opportunistically undertake short term trades with good set ups. Not knowing how the trade situation ultimately comes out and due to the elevated levels of the stock market as well as vast expansion of debt across the globe, guarding against tail risks is simply prudent.

Momo Crowd And Smart Money In Stocks

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

Gold

There is no discernable momo crowd or smart money activity.

For longer term, please see gold and silver ratings.

Oil

The momo crowd is buying oil. 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

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 indeterminate because the market is moving on trade related rumors and news.  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, bonds and currencies are range bound.

Gold futures are at $1472, silver futures are at $16.74, and oil futures are $59.00.

S&P 500 resistance levels are  3143, 3200 and 3223; support levels are 3125, 3100 and 3050.

DJIA futures are down 52 points.

MOMO SWITCHES FROM SELLING TO BUYING AFTER A TARIFF DELAY RUMOR

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

Tariff Delay

Earlier this morning the momo crowd was aggressively selling stocks then appeared a rumor that the U. S. and China are going to delay  tariffs set to go into effect on December 15th.  The momentum reversed on the rumor from negative to positive.  As the momentum reversed, the momo crowd switched from selling to buying stocks.

Note that the rumor is unconfirmed and there may have been an ulterior motive to spread the rumor to stop the market from going down.  Of course this is only one possible scenario, we have no direct knowledge.

Impeachment

House Democrats are holding a news conference on Trump impeachment.

In our analysis, unless something new emerges, Trump impeachment on the present facts is likely to have no impact on the markets.

Momo Crowd And Smart Money In Stocks

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

Gold

There is a strange reaction in gold to the rumor discussed above.  In theory gold should have gone down on the tariff rumor but gold is going up on the tariff rumor.  The reason behind this strange move is not clear. It might be as simple as a large buyer deciding to buy gold.

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

For longer term, please see gold and silver ratings.

Oil

Oil was showing signs of falling when the tariff rumor appeared.  The momo crowd was selling before the tariff rumor.  When the momentum reversed on the tariff rumor, the momo crowd started buying.  Smart money is inactive.

For longer term, please see oil ratings.

Marijuana

There is positive sentiment in marijuana as STZ appears to be taking charge of CGC.  An STZ executive will become the CEO of CGC.  STZ has a multi-billion dollar investment in CGC.

The scenario between CGC and STZ is unfolding exactly like we described a long time ago and subsequently repeated.   This is another spot on call from The Arora Report made well in advance.

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 indeterminable because the market is moving on rumors.  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 $1472, silver futures are at $16.73, and oil futures are $58.76.

S&P 500 resistance levels are  3143, 3200 and 3223; support levels are 3125, 3100 and 3050.

DJIA futures are up 18 points.

SEVERAL POTENTIAL MARKET MOVING EVENTS AHEAD

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

Events

Several potential market moving events are ahead.  The main one is what Trump does on trade.  A new round of tariffs on China are set to start on December 15th.  The consensus in the market place is that these tariffs will either be removed or postponed.  If tariffs go into effect, there is potential for the market to fall.  On the other hand if a trade deal is announced or Trump makes more positive comments while totally removing the tariffs, expect the market to spike up.

The Federal Reserve and European Central Bank (ECB) meeting is this week.

The U. K. election is on Thursday.

Momo Crowd And Smart Money In Stocks

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

Gold

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

For longer term, please see gold and silver ratings.

Oil

The momo crowd is buying oil.  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

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 and can easily swing either way. Expect the market to open lower unless there is news.  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 $1468, silver futures are at $16.69, and oil futures are $58.66.

S&P 500 resistance levels are  3200 and 3223; support levels are 3125, 3100 and 3050.

DJIA futures are down 22 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 23% – 33% and short to medium-term hedges of  5% – 15% and short term hedges of 15% – 20%.

 

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.

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