(The Weekly Digest reproduces the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers. )
SPECTACULAR JOB NUMBER, HOURLY WAGES RISE; COPPER, GOLD, AND SILVER BREAK SUPPORT
The U. S. Department of Labor just reported a spectacular jobs report for the month of October. Non-farm private payrolls rose 268K vs. 160K consensus.
One of the developing problems in the United States has been the rising income inequality. The average Joe and Jane have simply not been getting raises. October report is encouraging. Hourly wages rose by 0.4% vs. 0.2% consensus.
Copper is known as Dr. Copper because when the economy is strong there is more usage of copper. Central banks can manipulate a lot of things, but they cannot manipulate usage of copper. For this reason, investors are well advised to pay attention to copper price and inventories in London and Shanghai. This morning copper has broken the major support at $2.25. As a full disclosure, ZYX Short Sell Change Alert has a short position in copper and also in Southern Copper Corp.
Gold has decisively broken the major support at $1100 and silver has decisively broken major support at $15. As a full disclosure, ZYX Short Sell Change Alert has very long-term short positions in silver, and a silver miner from near their highs from a few years ago. ZYX Global Multi Asset Allocation also has a position in inverse silver ETF ZSL from the time silver was around $50 with the stated intention not to look at it for years.
Short squeeze in oil seems to be abating. However, Fridays are favorites of oil traders to cause short squeezes. The reason is that the shorts typically do not want to hold large short positions over the weekend due to the potential of geopolitical news from the Middle East.
Interest rates are rising and bonds are plunging.
Dollar is screaming higher.
Our very, very short-term early stock market indicator is negative.
What To Do Now?
It is important for investors to look ahead and not in the rear view mirror.
Consider only adding new positions per new posts since October 1st.
Consider continuing to hold existing positions. Based on individual risk preference, continue to hold 30-50% cash or hedges.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.
Gold futures are at $1086, silver futures are at $14.75, and oil futures are $44.77.
S&P 500 resistance levels are 2111, 2132, and 2150; support levels are 2063, 2038, and 2017.
DJIA futures are down 62 points.
‘A LIVE POSSIBILITY,’ TESTIFIES YELLEN OF INTEREST RATE INCREASE IN DECEMBER, FOREIGNERS DUMP CHINESE SHARES
‘A live possibility,’ testifies Yellen of interest rates increase in December. Gold, silver, bonds, oil, currencies and futures traders believe Yellen. However, stock investors say she is crying wolf.
Actions of futures traders after Yellen’s testimony show a probability of 56% of rate rise in December.
As the market in Shanghai rises, foreigners are aggressively dumping Chinese shares.
The last leg of short squeeze in oil appears to be ending.
Earlier today, silver fell below major support at $15 before rebounding.
Interest rates are rising after Yellen testimony and bonds continue to sell off.
Our very, very short-term early stock market indicator is negative but we expect the stock market to start out positive.
What To Do Now?
It is important for investors to look ahead and not in the rear view mirror.
Consider only adding new positions per new posts.
Consider continuing to hold existing positions. Based on individual risk preference, continue to hold 30-50% cash or hedges.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.
Gold futures are at $1108, silver futures are at $15.01, and oil futures are $46.27.
S&P 500 resistance levels are 2111, 2132, and 2150; support levels are 2063, 2038, and 2017.
DJIA futures are up 50 points.
MUTED ECONOMIC DATA, ATTACK ON DRUG PRICES ACCELERATES, AND WILL 2011 REPEAT?
Lots of new economic data from across the world is roughly in line with consensus.
ADP Employment Change came at 182K vs. 180K consensus.
September Trade Balance came at -$40.8 Billion vs. -$42 billion consensus.
Two senators are introducing a new bill on drug pricing.
Will 2011 Repeat Itself?
History does not always repeat itself, but it helps to be aware. In 2011, the U. S. stock market ran up in October just like in 2015. At the time in early November, most gurus were predicting huge gains in November and December. Their reasoning was performance chase. (Please see yesterday’s morning capsule for performance chase.) However reality turned out to be different from most gurus’ proclamations. Stocks fell in November.
From a long-term investor perspective, there is a big difference between November 2011 and November 2015 — the stock market is much higher now than it was four years ago. This inherently poses more risk.
Oil continues a massive short squeeze. DOE data to be released at 10:30 am ET may not make much of a difference as the governing factor is mechanics of short squeeze.
Gold and silver are attempting a feeble rebound.
Interest rates are ticking down but the dollar is getting stronger.
Our very, very short-term early stock market indicator is negative but we expect the stock market to start out positive and then roll over at some point.
What To Do Now?
It is important for investors to look ahead and not in the rear view mirror.
Consider only adding new positions per new posts.
Consider continuing to hold existing positions. Based on individual risk preference, continue to hold 30-50% cash or hedges.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.
Gold futures are at $1118, silver futures are at $15.28, and oil futures are $47.97.
S&P 500 resistance levels are 2111, 2132, and 2150; support levels are 2100, 2063, and 2038.
DJIA futures are up 55 points.
SMART MONEY CONTINUES TO SELL AS PERFORMANCE CHASERS BUY AGGRESSIVELY
So far this year, a large number of money managers have underperformed their benchmarks. Majority of the income of many money managers is not their salary but year end bonuses. The bonuses are based on beating the benchmarks.
Money managers who have underperformed their benchmarks do not have much of a choice other than holding their nose and aggressively buying in an attempt to catch up with benchmarks.
In contrast, Smart Money positions itself not to be restricted by artificial artifacts that get in the way of the Smart Money becoming richer. It is important to understand that Smart Money holds large positions. If such large positions were to be liquidated at once, the market would fall like a rock. For this reason Smart Money slowly scales out of positions in a rising market. This is exactly what is happening now.
Looking at the earnings projections so far, it continues to remain highly likely that 2015 will be the first year since 2009 with declining earnings.
The dollar and interest rates are edging higher.
Gold has broken another support level.
Oil is undergoing another bout of short squeeze.
Our very, very short-term early stock market indicator is negative.
What To Do Now?
It is important for investors to look ahead and not in the rear view mirror.
Consider only adding new positions per new posts.
Consider continuing to hold existing positions. Based on individual risk preference, continue to hold 30-50% cash or hedges.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.
Gold futures are at $1126, silver futures are at $15.30, and oil futures are $47.01.
S&P 500 resistance levels are 2100, 2111, and 2132; support levels are 2063, 2038, and 2017.
DJIA futures are down 17 points.
WEAK DATA FROM CHINA HITS OIL, GOLD, AND ASIAN STOCKS; ERDOGAN SWEEPS TURKEY ELECTION
Weak economic data from China hit Asian stocks hard. Nikkei 225 was down 2.1% overnight. Oil and gold are also being hit on the weak from China.
In Turkey, President Erdogan swept the election gaining about 49% of the vote, far more than the consensus. There are likely to be trades in Turkey, such trades will be in ZYX Emerging.
In the U. S., early weakness in futures has disappeared as orders from the weekend from retail investors excited by market’s recent up-move pile on brokers’ desks.
Interest rates are range bound.
Our very, very short-term early stock market indicator is positive but can quickly turn down.
What To Do Now?
It is important for investors to look ahead and not in the rear view mirror.
Consider adding new positions per new posts.
Consider continuing to hold existing positions. Based on individual risk preference, continue to hold 30-50% cash or hedges.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.
Gold futures are at $1135, silver futures are at $15.40, and oil futures are $46.06.
S&P 500 resistance levels are 2100, 2111, and 2132; support levels are 2063, 2038, and 2017.
DJIA futures are up 32 points.
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