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.
MASSIVE SHORT SQUEEZE TAKING PLACE IN STOCKS, GOLD RUNS ON LOWER DOLLAR, INFLATION AND RETAIL SALES
To gain an edge, this is what you need to know today.
Massive Short Squeeze In Stocks
The day before yesterday short sellers were building short positions. This was very logical and well supported by data. Yesterday when the market started going up, shorts had to scramble to buy to cover. Near the end of the day many shorts were forced to buy because of margin calls.
Short squeeze is still in progress moving stocks higher. Good earnings from JPM are helping.
Gold
Gold is running up on lower dollar.
Oil And Natural Gas
Short squeeze in oil appears to be temporarily over.
Short squeeze in natural gas is showing early signs of abating.
Retail Sales
Retail Sales, ex-auto came at 0.4% vs. 0.4% consensus.
Core CPI
Core Consumer Price Index (CPI) came at 0.3% vs. 0.2% consensus.
Technical Patterns
Canadian stocks are showing an Inside Bar. This is bullish. ETF of interest is EWC.
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 a strong up open.
The dollar is weaker.
Interest rates are ticking up and bonds are ticking down.
Gold futures are at $1326, silver futures are at $17.04, and oil futures are $63.42.
S&P 500 resistance level is 2800; support levels are 2765, 2740, and 2700.
DJIA futures are up 96 points.
INFLATION UNEXPECTEDLY COOLS, EARNINGS SEASON OPPORTUNITIES AHEAD, KOREAN BITCOIN BAN
To gain an edge, this is what you need to know today.
Inflation Unexpectedly Cools
Going forward, one of the major determinates of how successful you will be with your investments is making the correct call on inflation. For months PPI, which indicates inflation at the producer level, has been running hot. But producers have not been passing higher inflation at their level to consumers. For this reason CPI, which indicates inflation at the consumer level has been running cool.
In our models we give heavy weight to leading indicators to get ahead of Wall Street.
In this case, PPI is the leading indicator.
PPI was just released. Core PPI came at -0.1% vs. +0.2% consensus. This is a big change from the past several months when PPI ran hotter than the consensus.
Jobless Claims
Jobless Claims are also a leading indicator and for this reason carry heavy weight in our models to get ahead of Wall Street.
Initial Jobless Claims came at 261K vs. 248K consensus. For months, on the average, initial claims have been coming under the consensus indicating improving employment picture. The number just released is a reversal from the past trend just like PPI.
When trends in underlying economic data change, often trends in markets change with the delay. For this reason is it important to keep an eye on economic data.
Earnings Season Opportunities
Earnings season is starting tomorrow with bank earnings. Earnings season always provides lots of opportunities.
Stocks
The economic data released this morning is positive for stocks. The reason is that lower inflation and weaker employment means the Fed is less likely to be aggressive in raising interest rates.
Stock are seeing buying in early trade on economic data.
Gold
The economic data released this morning is positive for gold.
Gold is seeing buying in early trade on the new economic data.
Oil
The momo crowd continues to aggressively buy oil and natural gas. EIA data on oil inventories was not as bullish as API data. The smart money sold on EIA data but the momo crowd, oblivious of the inventory data, is continuing to buy on price momentum.
Bitcoin Ban In South Korea
There is a report that South Korea is considering banning bitcoin trading on exchanges. Bitcoin is tanking on the news.
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 start out positive.
Dollar is weaker on the economic data.
Bonds should have moved up and bonds should have moved down on the economic data but that is not happening as of this writing. The reason is not clear other than possibly selling from overseas investors.
Gold futures are at $1322, silver futures are at $17.01, and oil futures are $63.85.
S&P 500 resistance level is 2765; support levels are 2740, 2700, and 2688.
DJIA futures are up 27 points.
MOM AND POP MONEY DEPLOYED, NOW NO NEW MONEY TO PROPEL STOCKS HIGHER; BLOODBATH IN BONDS, BUYING IN OIL AND GOLD
To gain an edge, this is what you need to know today.
No New Money
Yesterday morning we shared with you:
Mom And Pop Buying Stocks
As the new money from pension funds and big bonuses coming into the stock market at the beginning of the year has subsided, now mom and pop are getting excited. There is considerable evidence that over the weekend mom and pop were sending money to mutual funds and money managers. Some of this money deployed yesterday and the rest will be deployed today.
The ‘smart money’ is lightly selling stocks in the early trade.
Now mom and pop’s money is deployed. The ‘smart money’ was more than happy to sell stocks to mom and pop.
In early trade, no new money is coming in but the smart money continues to sell.
Bloodbath In Bonds
There is a bloodbath happening in bonds on a report that China may be buying less U. S. bonds.
Gold
Money is rushing into gold on fear of a selloff in stocks.
Oil
API showed a draw of over 11 million barrels. Oil is running as the media and gurus are hyping this number. However, this number is in line with whisper numbers. After EIA data to be released at 10:30 am ET, there may be a ‘sell the news’ reaction.
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 $1322, silver futures are at $17.10, and oil futures are $63.40.
S&P 500 resistance level is 2765; support levels are 2700, 2688, and 2661.
DJIA futures are down 69 points.
MOM AND POP BUYING MORE STOCKS, OIL AT 2014 LEVEL, LONG-TERM INTEREST IN GOLD, CHINA CONFIDENCE
To gain an edge, this is what you need to know today.
Mom And Pop Buying Stocks
As the new money from pension funds and big bonuses coming into the stock market at the beginning of the year has subsided, now mom and pop are getting excited. There is considerable evidence that over the weekend mom and pop were sending money to mutual funds and money managers. Some of this money deployed yesterday and the rest will be deployed today.
The ‘smart money’ is lightly selling stocks in the early trade.
Long Term Interest In Gold
In 2017, gold backed ETFs added 197.5 tons of gold. Such ETFs grew their assets by over 8%. Looking at the data under the surface, there are three interesting observations.
- In the past, Asian investors have been putting money in gold backed ETFs. In a reversal, last year gold backed ETFs were sold by Asian investors. Gold assets of Asian ETFs fell by 12.9 tons.
- Traditionally Europeans have been net sellers of gold. In a reversal, 148.6 tones of gold was bought by European ETFs.
- North American ETFs were net buyers of 62.9 tons of gold.
Gold Short Term
In early trade, the smart money is lightly selling gold. The momo crowd is buying but not aggressively.
Oil At 2014 High
Brent oil closed at the highest level since 2014. Brent is the standard for oil outside the United States. The standard in the United States is WTI.
The momo crowd is aggressively buying oil. The smart money is lightly selling oil into the strength.
China Confidence
The Chinese government appears to have gained more confidence. It tightly controls yuan exchange rate. Now the government has relaxed the fixing mechanism. This indicates the government is confident of the Chinese economy and the measures it has put in to control the outflows of yuan.
Technical Patterns
Brazilian stocks are tracing a Inside Bar. This is bearish. The ETF of interest is EWZ.
Home builders are tracing a Hanging Man. This is bearish. The ETF of interest is ITB.
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 expect the market to start higher.
Interest rates are ticking up and bonds are ticking down.
Dollar is slightly stronger.
Gold futures are at $1320, silver futures are at $17.02, and oil futures are $61.94.
S&P 500 resistance level is 2765; support levels are 2740, 2700, and 2688.
DJIA futures are up 64 points.
BUYING FRENZY TEMPERED AS NEW MONEY ALREADY INVESTED AND DOLLAR STRENGTHENS
To gain an edge, this is what you need to know today.
Buying Frenzy Tempered
Buying frenzy in stocks, gold and oil is being tempered this morning as the new money coming into the market for the new year is already mostly invested.
Dollar Strengthens
After getting weaker this year, this morning the dollar is strengthening. Stocks, gold and oil like a weaker dollar.
Smart Money Selling
The smart money is lightly selling stocks, gold and oil this morning. Selling by smart money is containing aggressive buying by the momo crowd. We will have to wait and watch to see if smart money continues to sell as the day progresses. Our expectation is that the momo crowd will continue to buy.
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 but expect the momo crowd to try to push it higher first.
Gold futures are at $1320, silver futures are at $17.17, and oil futures are $61.60.
S&P 500 resistance levels are 2740 and 2765; support levels are 2688, 2661, and 2631.
DJIA futures are down 17 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%.
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