WEEKLY MARKET DIGEST: SPOT ON CALL, RAISE CASH, GOOD GDP STOPS AMAZON HEMORRHAGE $DIA $GLD $QQQ $SLV $SPY $TBT $USO

WEEKLY MARKET DIGEST: SPOT ON CALL, RAISE CASH, GOOD GDP STOPS AMAZON HEMORRHAGE $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.

ACT NOW TO SAVE $2,005 — FOR INVESTORS SERIOUS ABOUT MAKING MILLIONS IN MARIJUANA

RAISE CASH, GOOD GDP NUMBER STOPS THE BLEEDING IN THE MARKET FROM SLOWING AMAZON GROWTH

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

Raise Cash

Please see What To Do Now section.

Slowing Amazon Growth

Lately Amazon (AMZN) has been the most popular stock with strong investor conviction.  Slowing growth at Amazon would have likely caused a major plunge in the stock market but a good GDP number has come to the rescue.

GDP

Q3 GDP-Advanced came at 3.5% vs.  3.3% consensus.   This shows that the U. S. economy is doing well.  However keep in mind that GDP is a lagging indicator.  At The Arora Report, our models focus on the leading indicators.

Brazil Elections

Brazil is heading towards an election this weekend.  The Brazilian market has been running up on the expectation that the right wing candidate will win.

Momo Crowd And Smart Money In Stocks

The momo crowd is aggressively selling stocks. Light buying came in from smart money after the good GDP report, but the buying is not in popular high beta stocks.

Gold

Money is moving into gold out of stocks.   The momo crowd is aggressively buying gold.

Oil

The momo crowd is getting whipsawed in oil.  They were buying yesterday and selling today.

Marijuana

In early trade, trading is listless in most marijuana stocks.

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.

Bonds are ticking up and interest rates are ticking down.

Gold futures are at $1236, silver futures are at $14.67, and oil futures are $66.81.

S&P 500 resistance levels are 2688, 2700 and 2740; support levels are 2658, 2631 and 2615.

DJIA futures are down 172 points.

 

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CHART SHOWS THE ‘BUY AND HOLD’ CROWD KEEPING THE FAITH — THAT IS NOT A GOOD THING

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

The Chart

During the market turmoil, the ‘buy and hold’ crowd is keeping the faith that the market will not go much lower and will go much higher. This is not a good thing as I explain later in this column.

One of the biggest risks with this stock market is the rise of passive investing. Let us explore with the help of a chart

Please click here for an annotated chart of S&P 500 ETF (SPY). Similar conclusions can be drawn from a chart of Dow Jones Industrial Average (DJIA); charts of Nasdaq 100 ETF (QQQ) and small cap ETF (IWM) show more selling. Please note the following:

  • The chart shows RSI divergence. In plain English this mean that as stock prices have gone down, RSI has risen. This is a positive and indicates a rebound.
  • The chart shows the Arora first target given in advance was reached. We shared with our subscribers in advance, “If traditional technical analysis holds, there should be a retest of 2710 level in S&P 500. If a retest takes place, hunt and destroy algorithms may try to take out stops that naïve investors have placed under 2710 and then under 2700. These algorithms may drive S&P 500 to 2690. On the positive side the stock market is oversold. Oversold markets tend to have strong rallies. For this reason, those who are thinking of short selling here need to be extra cautious (slightly edited for readability).”
  • The chart shows that our call was spot on. S&P 500 (SPX) futures  dipped to 2692.25 and then proceeded to stage a strong rally. Our call was for a dip to 2690. In this business it does not get any better than this.
  • The Arora Report called the rebound shown on the chart suspect due to many characteristics. First, weak hands were not taken out. When weak hands are taken out, the rebound becomes more sustainable. Second, volume was lackluster indicating the lack of conviction in the rally.
  • As shown on the chart, volume was relatively low during the fall and the rebound, and also during the subsequent fall. This is a negative beyond the very, very short term bounce.
  • The chart shows the support zone.
  • As expected, high beta stocks were hit disproportionately hard. High beta stocks are the ones that move more than the market. Notable among FAANG stocks for their high beta are Amazon (AMZN) and Netflix (NFLX) but Apple (AAPL), Google (GOOG) (GOOGL), and Facebook (FB) were also not spared. These are the stocks that also rebound the most. Among popular semiconductor stocks, AMD (AMD), STMicroelectronics (STM), NVIDIA (NVDA) and Micron (MU) have been hit. Tesla (TSLA) has rocketed up on good earnings and a short squeeze shoring that individual stories matter even when the market is falling. Texas Instrument’s (TXN) earnings are especially noteworthy because they indicate weakness is coming in several important sectors of the economy. AMD stock has been hit especially hard after earnings because the momo (momentum) crowd had artificially run it up and the stock had become very expensive. Microsoft (MSFT) gross margins fell for the first time in eight quarters but bulls are ignoring it — a sign of complacency. Popular marijuana stocks such as Canopy Growth (CGC), Aurora Cannabis (ACB), Tilray (TLRY) and Cronos (CRON) have been hit hard after a big run going into Canada legalization.

Buy And Hold Crowd Keeps Faith

The volume from the chart, intraday money flows and anecdotal evidence shows that the buy and hold crowd has kept the faith. They did not sell. The buy and hold crowd operates on the assumption that the next 50 years will be similar to the past 50 years in terms of the long term uptrend in the stock market. Do you really know if this will be the case? The buy and hold also

No Cathartic Flush

I would have liked to see a cathartic flush for two reasons.

  • It would have taken weak hands out.
  • It would have shaken the prevailing complacency among the buy and hold crowd.

If these two things do not happen, it is good in the very short term especially since positive seasonals are coming. However it is not a good thing for the long term.

Momo Crowd And Smart Money In Stocks

The momo crowd is buying stocks in the early trade but smart money is inactive.

Gold

Gold is seeing buying on dollar weakness.  The momo crowd is buying gold but smart money is inactive.

Oil

The momo crowd is buying oil in anticipation of Iran sanctions and ignoring the inventory glut.

Marijuana

The momo crowd is buying in the early trade. The 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 but expect the market to open higher.

Interest rates and bonds are range bound

Gold futures are at $1235, silver futures are at $14.72, and oil futures are $67.13.

S&P 500 resistance levels are 2688, 2700 and 2740; support levels are 2661, 2658 and 2631.

DJIA futures are up 122  points.      

SPOT ON CALL ON S&P 500 2690 LEVEL, SUSPECT REBOUND, BEIGE BOOK

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

Spot On Call On S&P 500

Our call in yesterday’s Morning Capsule has proven spot on.  In this business, it does not get any better than this.  We wrote:

Retest

If traditional technical analysis holds, there should be a retest of 2710 level in S&P 500.  If a retest takes place, hunt and destroy algorithms may try to take out stops that naïve investors have placed under 2710 and then under 2700.  These algorithms may drive S&P 500 to 2690.  As of this writing S&P 500 futures are trading at 2717.

Over Sold

On the positive side the stock market is oversold.  Oversold markets tend to have strong rallies.  For this reason, those who are thinking of short selling here need to be extra cautious.

S&P 500 futures dipped to 2692.25 and then proceeded to stage  a strong rally. Our call was for a dip to 2690.

Suspect Rebound

The rebound had many characteristics that make it suspect.  Most notable are:

  • Weak hands were not taken out.  When weak hands are taken out, the rebound becomes more sustainable.
  • Volume was lackluster indicating the lack of conviction in the rally.

Earnings

Boeing (BA) reported great earnings and BA is adding about 122 points to DJIA in the early trade.

Beige Book

Fed’s Beige Book will be released at 2:00 pm ET.  It may be a market moving event.

HIgh Beta Stocks

High beta stocks are the popular stocks that move more than the market.  The momo crowd is aggressively buying high beta stocks this morning.

Momo Crowd And Smart Money In Stocks

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

Gold

Gold is giving up some of its gains as the dollar gets stronger and money moves out of gold into stocks.

Oil

Oil fell on a statement by Saudi that they will increase production if needed.

API showed  a build of  9.88 million barrels vs. 3.70 consensus.  This is very bearish. However after falling on this data, oil is staging  a strong rebound as of this writing.  It appears that expectations are for EIA data to be not as bearish as API data.  EIA data will be released at 10:30 am.

Marijuana

Smart money lightly bought select marijuana stocks on the big dip yesterday.  In the early trade this morning, smart money is inactive.  The momo crowd is aggressively buying marijuana stocks.

Technical Patterns

U. S. stocks staged a key reversal.  This is bullish.  ETFs of interest are SPY and QQQ.

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 up

Interest rates are ticking down and bonds are ticking up.

The dollar is stronger.

Gold futures are at $1231, silver futures are at $14.74, and oil futures are $66.76.

S&P 500 resistance levels are 2765, 2800 and 2840; support levels are 2700, 2688 and 2661.

DJIA futures are up 15 points.

ROUND ROBIN SELLING EMANATING FROM CHINA ACCELERATED BY POOR EARNINGS

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

Round Robin In China

Prior gains in China from the government’s actions evaporated.  When the government did not intervene again, Shanghai Composite fell 2.3%.  Selling spread through out Asia, carried on to Europe and is showing up in the United States.

CAT And MMM Accelerated Down Move

CAT and MMM are two important economically sensitive multinational companies.  Both reported poor earnings this morning.  This accelerated the down move.

Retest

If traditional technical analysis holds, there should be a retest of 2710 level in S&P 500.  If a retest takes place, hunt and destroy algorithms may try to take out stops that naïve investors have placed under 2710 and then under 2700.  These algorithms may drive S&P 500 to 2690.  As of this writing S&P 500 futures are trading at 2717.

Over Sold

On the positive side the stock market is oversold.  Oversold markets tend to have strong rallies.  For this reason, those who are thinking of short selling here need to be extra cautious.  Based on probabilities, risk reward is not favorable in either buying or short selling right here unless you are a nimble day trader.

Momo Crowd And Smart Money In Stocks

The momo crowd is aggressively selling stocks.  The smart money is inactive.

Gold

Money is moving into gold from stocks. The momo crowd is aggressively buying gold.  The smart money is inactive.

Oil

The smart money is selling oil on concerns about global growth. The momo crowd is inactive in oil.

Marijuana

We have been sharing with you that marijuana stocks are high beta stocks.  In plain English this means, they move a lot.  The momo crowd is aggressively selling marijuana stocks.  Overall smart money flows are negative but on down spikes there is light buying from smart money in select marijuana stocks.

Technical Patterns

Russian stocks are tracing a Symmetrical Continuation Triangle. This is bearish.  ETF of interest is RSX.

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 but can easily swing positive.

Money is moving into the safety of bonds causing interest rates to dip and bonds to rise.

Dollar is slightly weaker.

Gold futures are at $1241, silver futures are at $14.81, and oil futures are $68.23.

S&P 500 resistance levels are 2740, 2765 and 2800; support levels are 2700, 2688 and 2661.

DJIA futures are down 436 points.

POSITIVE SENTIMENT IN U. S. STOCKS FROM CHINA SURGE AND ITALY

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

Positive Sentiment In U. S. Stocks

There is positive sentiment in U. S. stocks emanating from China and Italy.

China Surge

Shanghai Composite surged 4.1% after President Xi expressed his unwavering support for Chinese companies.

Italy Downgrade

Italy’s downgrade by Moody’s  was sell severe than expected.  Italian stocks and bonds are rising.

Momo Crowd And Smart Money In Stocks

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

Gold

Gold is being sold on China surge.

Oil

Oil is volatile as the momo crowd is buying but smart money is selling.

Marijuana

Early trade is listless in the absence of any major catalyst. A big difference from the past is that the momo crowd is not aggressively buying marijuana stocks.  However marijuana stocks are oversold in the very short term.  If a bounce starts, short covering can take them higher.

Technical Patterns

Chinese shares are tracing an Island Bottom.  This is bullish.  ETF of interest is ASHR

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 positive but can easily turn negative.

Interest rates are ticking down and bonds are ticking up.

Currencies are mixed.

Gold futures are at $1224, silver futures are at $14.58, and oil futures are $68.84.

S&P 500 resistance levels are 2800, 2840 and 2860; support levels are 2765, 2740 and 2700.

DJIA futures are up 71  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  10% – 15% and short term hedges of 3%.

 

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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