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.
STOCK MARKET X-RAY, TRUMP THINKS OF A VETO AND CHINA SUPPORTS ITS STOCK MARKET
To gain an edge, this is what you need to know today.
Market X-ray
In yesterday’s Morning Capsule, we raised cash levels and described the reasons of hawkish Fed tilt and tariffs. This was all done before the ugly sell off. Investors ought to look at a market x-ray. We will do a separate post.
Momo Crowd And Smart Money
A vast majority of selling yesterday was by the m0mo crowd. In early trade today, the momo crowd was first selling driving DJIA futures down another 200 points on top of the 700 point drop yesterday. At down 900 points from yesterday, the smart money stepped in to start buying lightly. The smart money buying has erased the 200 point loss from the earlier momo selling. As of this writing, smart money has stopped buying as the market has moved up. However, now that the market has moved up, momo has started buying aggressively.
Trump Veto
It has not gained much publicity but investors ought to be concerned about the reports that Trump is thinking of vetoing the new spending bill. If Trump vetoes, this will cause uncertainty that will be negative for the market.
China Intervenes
On the positive side for investors, China is intervening to support its stock market.
Gold, Bonds And Oil
Money is flowing out of stocks and into gold, bonds and oil.
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.
Gold futures are at $1348, silver futures are at $16.64, and oil futures are $64.83.
S&P 500 resistance levels are 2661, 2688 and 2700; support levels are 2631, 2615, and 2594.
DJIA futures are up 43 points.
HAWKISH FED TILT, TRADE WAR FEARS, MOMO SELLS, PAY ATTENTION TO ‘WHAT TO DO NOW’
To gain an edge, this is what you need to know today.
Hawkish Fed Tilt
Fed raised interest rates by 0.25% as expected. However there is a hawkish tilt in projections for 2019 and 2020. In plain English, this means that interest rates may go higher in 2019 and 2020 than expected.
In our analysis, 2019 and 2020 are too far to make any firm projections. All the economy has to do is weaken slightly and interest rate projections will go down.
Trade War Fears
Trump is set to announce about $50 billion in tariffs directed at over 100 different types of Chinese goods. This is igniting fears of a trade war.
In our analysis, there may be strong rhetoric coming back from China but China’s actual response is likely to be measured.
Momo And Smart Money
The momo crowd is aggressively selling.
Smart money lightly sold yesterday afternoon but is inactive this morning.
Gold
Gold ran up after the Fed announcement on momo buying. Gold is giving back some of those gains this morning but is strong.
Oil
Oil rallied yesterday after bullish EIA numbers. This morning oil is pulling back as yesterday’s rally was over done.
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 rallying on trade war concerns.
Gold futures are at $1329, silver futures are at $16.49, and oil futures are $64.70.
S&P 500 resistance levels are 2700, 2740 and 2765; support levels are 2661, 2631, and 2615.
DJIA futures are down 311 points.
WAIT FOR FED DECISION, MOMO BUYS GOLD, OIL JUMPS
To gain an edge, this is what you need to know today.
Wait For Fed
The Fed will announce its rate decision at 2:00 pm ET. A rate increase of 0.25% appears to be baked in.
We will be reading the tea leaves to see the future course of rate hikes.
Smart Money And Momo Crowd
The momo crowd is buying stocks in early trade. The pattern of the momo crowd is to buy ahead of the Fed announcement. Today is no different.
The smart money is inactive.
Gold
The pattern of the momo crowd is to aggressively buy gold going into a Fed announcement. Today is no different. The momo crowd is aggressively buying gold.
The smart money is inactive.
Oil
API showed a draw of 2.739 million barrels vs. a consensus of a build of 2.5 million barrels. This is causing oil to jump.
EIA data, which is considered more authoritative, will be released at 10:30 am ET.
Technical Patterns
Chinese internet stocks are tracing a Flag. This is bullish. ETF of interest is KWEB. As a full disclosure, ZYX Global has a position in KWEB.
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 lower.
The dollar is weaker.
Interest rates are ticking up and bonds are ticking down.
Gold futures are at $1317, silver futures are at $16.23, and oil futures are $64.12.
S&P 500 resistance levels are 2740, 2765 and 2800; support levels are 2700, 2688, and 2661.
DJIA futures are down 43 points.
INTEREST RATE HIKE LIKELY TOMORROW, MOMO IS SHRUGGING OFF TECH STOCK SELL OFF
To gain an edge, this is what you need to know today.
Interest Rate Hike Likely Tomorrow
FOMC is meeting. FOMC will likely announce an interest rate hike tomorrow. We will carefully be reading the tea leaves for the future course of the Fed regarding interest rates. This may require adjustment in the present portfolios if the future course becomes different from our present projections.
Momo Shrugs
After aggressively selling tech stocks for most of yesterday, momo is aggressively buying stocks this morning in the early trade. Momo is perhaps encouraged by the late buying that came into the stock market near the close. The buying was, in part, short sellers booking profits and mutual funds buying.
The smart money is inactive.
Gold
Gold is being hit on the prospect of higher interest rates.
Oil
The momo crowd is aggressively buying oil.
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. Please also be aware that there is a fairly high probability of significant down turn.
Dollar is stronger.
Interest rates are ticking up and bonds are ticking down.
Gold futures are at $1310, silver futures are at $16.21, and oil futures are $63.29.
S&P 500 resistance levels are 2740, 2765 and 2800; support levels are 2700, 2688, and 2661.
DJIA futures are down 7 points.
AGGRESSIVE MOMO SELLING OF FAANG STOCKS SPILLING OVER, U. K. EU BREXIT DEAL
To gain an edge, this is what you need to know today.
Aggressive Selling By Momo Of FAANG Stocks
In early trade, momo is aggressively selling FAANG stocks. FAANG stocks are FB, AMZN, AAPL, NFLX and GOOG. There are two new fundamental reasons for this selling.
- AAPL is developing a new display technology that may hurt its suppliers.
- FB consumer data was misused by the Trump campaign.
Spilling Over
In early trade, selling in FAANG stocks is spilling over in other sectors.
Smart Money
We have been sharing with you that smart money has often been light sellers of FAANG stocks into the strength. Typically smart money does not sell into weakness and that is the case in the early trade.
EU U. K. Deal
EU and U. K. have reached a transition deal for Brexit. We are awaiting details to see if there are any opportunities for investors.
Russia
Putin has been re-elected. He will become the longest serving ruler of Russia with the exception of Stalin. Russia continues to be the least expensive market in the world.
Russia is covered in ZYX Emerging.
Gold
Trading in gold is listless. If the stock market continues to fall as the day progresses, gold may see some buying.
Oil
Oil is seeing buying on a statement from Russia that it will cooperate with OPEC to extend production cuts to 2019.
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.
The dollar is weaker.
Interest rates are ticking up and bonds are ticking down.
Gold futures are at $1312, silver futures are at $16.29, and oil futures are $62.27.
S&P 500 resistance levels are 2765, 2800 and 2840; support levels are 2700, 2688, and 2661.
DJIA futures are down 104 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 20% – 35% and short to medium-term hedges of 15% – 25% and very short term hedges of 20%.
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