WEEKLY MARKET DIGEST: STOCKS FALL ON RISING INTEREST RATES AND OVERBOUGHT CONDITIONS, WHAT TO DO NOW $DIA $GLD $QQQ $SLV $SPY $BTC.X $TBT $USO

WEEKLY MARKET DIGEST: STOCKS FALL ON RISING INTEREST RATES AND OVERBOUGHT CONDITIONS, WHAT TO DO NOW $DIA $GLD $QQQ $SLV $SPY $BTC.X $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.

GOOD JOBS REPORT, BOND JITTERS SPILLING INTO STOCKS, PAY ATTENTION TO REACTION OF THE NEWS

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

Good Jobs Report

Nonfarm Private Payrolls came at 196K vs. 175K consensus. This indicates that employment in the United States continues to be strong.  Is this good news or bad news? Please read on.

Reaction To News

In this market, good news has been considered good news and bad news has been considered good news.  This will not last forever.  Rising employment means higher wages.  Higher wages means higher inflation. Higher inflation means higher interest rates.  At some point higher interest rates will mean lower stock prices.

It is high time that investors engage in active management of their portfolios to pick the best stocks and ETFs in a diversified portfolio approach with an appropriate level of cash and/or hedges.

Please pay attention to the ‘What To Do Now’ section below.

Bond Jitters Spilling Into Stocks

Smart money has been paying a lot of attention to rising interest rates across the globe.  As is usually the case, the momo crowd remains oblivious and continues to buy.  Because of rising interest rates, smart money is trimming on strength generated by the momo crowd.

Earlier this morning, the yield on 30-year Treasuries climbed over 3% and yield on the 10-year note was hovering around 2.8%.

We have been sharing with you in advance for a while that a yield over 2.7% in Treasuries is a dangerous level.

Gold

Gold is coming under pressure on the good jobs report.  Good jobs report means higher interest rates. Since gold does not pay any interest, higher interest rates are bad for gold.

In the longer term, high employment is good for gold.  High employment means inflation.  Historically, inflation is good for gold.

Investors need to discriminate between various time frames.  This is why our gold ratings are provided in six different time frames.

Oil And Natural Gas

Oil continues to levitate based on the momentum created yesterday by a major bank.

The short squeeze in natural gas is over.

Bitcoin

Bitcoin continues to be under pressure trading around $8,475.

Technical Patterns

Lithium stocks are tracing a Megaphone Top. This is bearish. ETF of interest LIT.

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 reverse quickly because momo crowd is aggressively buying the dip as of this writing.

The dollar is stronger on the good employment report.

Interest rates are ticking up and bonds are ticking down on the good employment report.

Gold futures are at $1337, silver futures are at $16.93, and oil futures are $65.68.

S&P 500 resistance levels are 2840, 2860 and 2918; support levels are 2800, 2765 and 2740.

DJIA futures are down 241  points.

SMART MONEY SELLS INTO STRENGTH AGAIN, FED HAWKISH, BITCOIN FALLS ON INDIA, INDIA BUDGET, BOOM IN EUROPE

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

Smart Money Sells Into Strength

After selling into strength for days, the day before yesterday when the market fell, smart money bought lightly near the lows.  Yesterday near the highs of the day, smart money sold again.  After the Fed’s decision, smart money resumed selling.

Interestingly, the momo crowd’s behavior has been opposite of the smart money.  The day before yesterday when the market fell, the momo crowd was selling near the lows.  Yesterday the momo crowd was buying near the highs.

In early trade today, the momo crowd has been aggressive buyers but smart money has been a light seller.

Fed Hawkish

The Fed left rates unchanged but the statement was more hawkish than expected.  Interest rates rose after the statement and smart money sold bonds.

Bitcoin Falls On India

Our call on bitcoin given on January 17, 2018, has proven spot on. We wrote:

Bitcoin futures have fallen below $10,000 as of this writing.  Expect a very, very short-term rally.

At the time of the call, bitcoin was trading around $9,200.  It rallied to $12,109. This morning bitcoin is falling to $9,125 as of this writing.

The immediate trigger for the fall is that India has stated that bitcoin is not a legal tender.  India is likely to move to stop payments in bitcoin.

India Budget

The budget in India is always a big economic event.  The budget is bad for bonds.  It is not helpful for equities in the short term.  However it is good for equities in the long term.  We will be writing in more detail with opportunities in ZYX Emerging.

Manufacturing In Europe

Purchasing Manager’s Index for the Euro area came at 59.6 vs. 58 consensus.  This is the fastest pace ever in Europe.

In plain English, manufacturing is booming in Europe.

Gold

There are several cross currents in gold.  On one hand the hawkish Fed is bad for gold.  On the other hand, investors who fear a correction in stocks are buying gold.

Oil And Natural Gas

EIA data was bearish for oil.  This morning oil prices are rising due to a bullish forecast from an influential bank.

The short squeeze in natural gas is over.  Natural gas futures have fallen as much as 17% from their peak.

Technical Patterns

Several material stocks are tracing a Hammer. This is bullish.  ETF of interest is XLB.

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.

Interest rates are ticking up and bonds are ticking down.

Gold futures are at $1342, silver futures are at $17.10, and oil futures are $65.52.

S&P 500 resistance levels are 2840, 2860 and 2918; support levels are 2800, 2765, and 2740.

DJIA futures are down 151 points.

SMART MONEY BOUGHT STOCKS ON THE DIP, BLOWOUT ADP, FED DAY

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

BOJ Decision Arrests Declines

A Bank of Japan decision to increase asset purchases has arrested the decline in stocks and bonds.

Smart Money Bought Stocks

Yesterday afternoon when the stock market was down over 300 DJIA points, smart money lightly bought stocks while the momo crowd sold.  In the early trade this morning, smart money was still buying and the momo crowd was still selling.  As the morning  has progressed and the market has gained a strong  upward momentum, smart money has stopped buying but the momo crowd is buying now as of this writing.

Blowout ADP

ADP is the largest payroll processor in the United States.  It provides an employment report ahead of the official employment report that will be released on Friday.

ADP came at 231K vs. 185K consensus.

The stock market is finding this encouraging.

Fed Day

The Fed will announced its rate decision this afternoon. The consensus is for no change. We will be reading the tea leaves for the future direction of interest rates.

Gold

Gold is moving higher on weaker dollar.

Oil And Natural Gas

API data came with a build of 3.23 million barrels vs. 3 million consensus.  This is slightly bearish for oil.

EIA data on oil will be released at 10:30 am and may be market moving.

Natural gas has fallen about 4% as short squeeze continues to abate.

Bitcoin

SEC is cracking down on initial coin offerings. This is putting pressure on bitcoin.  Bitcoin is trading right at the support level of $10,000.

Technical Patterns

Bank stocks are tracing an Inverted Hammer. This is bullish.  ETF of interest is KBE.

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.

Interest rates are ticking down and bonds are ticking up.

Gold futures are at $1346, silver futures are at $17.22, and oil futures are $64.12.

S&P 500 resistance levels are 2840, 2860 and 2918; support levels are 2800, 2765, and 2740.

DJIA futures are up 209  points.

SMART MONEY SELLS STOCKS INTO THE STRENGTH, STATE OF THE UNION, GROWTH IN EUROPE, HEALTHCARE ALLIANCE

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

Smart Money Sells Stocks

Smart money has been lightly selling stocks into the strength.  The driving force has been rising bond yields.  The momo crowd has been oblivious and aggressively buying.

In yesterday’s Morning Capsule, we wrote:

Smart money is lightly selling stocks in the early trade due to rising interest rates.

In Friday’s Morning Capsule, we wrote:

Yesterday near the highs, smart money was selling while momo was buying.

The interpretation of smart money selling is not that the smart money is bearish on the market.  The market is very overbought.  Overbought markets tend to be vulnerable.  Smart money knows this and it is simply prudent to trim at the edges.  This way smart money will have more cash to invest in new opportunities with better potential risk adjusted returns.

State Of The Union

President Trump will deliver his State of the Union address tonight.  There is likely to be strong emphasis on infrastructure spending.  There are many opportunities for companies involved in the infrastructure business.  However, stocks in the group are overbought.

Growth In Europe

GDP in the Euro area grew by 0.6% vs. 0.5% consensus.

Healthcare Alliance

AMZN, JPM and BRK.A are planning a new healthcare alliance to challenge traditional insurers and cut costs to start a new non-profit. This is putting pressure on healthcare stocks and ETFs.

Gold

Gold is running on the weakness in the dollar.  Some money is also moving out of stock into gold.

Oil And Natural Gas

Oil is moving down and smart money is selling.

Technical Patterns

Several oil and gas equipment and service stocks are tracing a Double Top. 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.  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.

Interest rates continue to tick up and bonds to tick down.

Gold futures are at $1300, silver futures are at $17.80, and oil futures are $60.00.

S&P 500 resistance levels are 2840, 2860 and 2916; support levels are 2800, 2765, and 2740.

DJIA futures are down  263  points.

DOLLAR STRENGTHENS AND BONDS SLIDE TO A DANGEROUS LEVEL

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

Dollar Strengthens

The dollar continues to be in the lead driving other markets.  The dollar is strengthening.  Our call from last week has now proven spot on. Last week we wrote,

In the short-term we expect a bounce in the dollar as it is very oversold.

Bonds Slide To A Dangerous Level

Bonds are now sliding to a dangerous level with yields at the highest level since early 2014.  When yields go higher bonds go lower.

Stocks

Smart money is lightly selling stocks in the early trade due to rising interest rates.

The momo crowd is oblivious as usual and aggressively buying stocks in the early trade.

Gold

Gold is being hit hard as the dollar rises.

Gold is priced in dollars.  For this reason, gold moves inverse to the dollar.

Smart money lightly sold gold into the strength.  The momo crowd is oblivious as usual and continues to aggressively buy.

Oil And Natural Gas

Oil is priced in dollar just like gold.

Oil is coming under pressure as the dollar rises.

The short squeeze in natural gas appears to be abating.

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.

Gold futures are at $1343, silver futures are at $17.24, and oil futures are $65.70.

S&P 500 resistance level is 2918; support levels are 2860, 2840, and 2800.

DJIA futures are down 68  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 19% – 29% and short to medium-term hedges of  15% – 25% and very short term hedges of 15%.

 

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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