WEEKLY MARKET DIGEST: STOCKS UP ON RUMORS AFTER A DIP ON SPECIAL COUNSEL TO INVESTIGATE TRUMP $DIA $GLD $QQQ $SLV $SPY $TBF $TBT $USO $XBI $KBE

WEEKLY MARKET DIGEST: STOCKS UP ON RUMORS AFTER A DIP ON SPECIAL COUNSEL TO INVESTIGATE TRUMP $DIA $GLD $QQQ $SLV $SPY $TBF $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.

STOCKS UP ON RUMORS, TRUMP TO PROPOSE BALANCED BUDGET, OIL OVER $50

This is what you need to know today.

Stocks Up On Rumors

There have been rumors in the market that Comey would say he was not pressured.  The rumors have resulted in a bounce in the stock market.

Gold

Gold fell under $1250 as stocks bounced.  This morning the momo crowd is back buying gold aggressively again.  There is no buying by the ‘smart money.’

Trump Balanced Budget

Trump is proposing to balance the budget over 10 years. He plans to leave Social Security and Medicare untouched but proposes deep cuts in other social programs.

Oil

Oil has moved up as most OPEC members back extension of production cut deal.

Brazil

Stocks in Brazil plunged yesterday on a report that the sitting president approved a bribe to a witness to silence him in the corruption probe.  There have been many calls for President Michel Temer to step down, but so far he has defied such calls.

Updates on Brazil will be in ZYX Emerging. Our plan is to buy Brazil if there is panic selling.

Technical Patterns

Several regional banks are tracing an Inside Bar.  This is a bullish pattern.  ETF of interest is .

This is powerful information and many investors use this to enter trades in addition to our official signals.  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 out positive.

Dollar is weaker.

Interest rates are ticking up and bonds are ticking down as safe haven money flows out.

Gold futures are at $1253, silver futures are at $16.79, and oil futures are $50.29.

S&P 500 resistance levels are 2400, 2450 and 2500; support levels are 2363, 2334, and 2300.

DJIA futures are up 39 points.

SPECIAL COUNSEL APPOINTED

This is what you need to know today.

Special Counsel

The news late yesterday was that the Justice Department has appointed a special counsel to investigate Russian meddling in the U. S. elections and related matters.  The potent words here are, ‘related matters.’  This will allow the special counsel to investigate anything and everything he wishes about Trump.

Trump has called it the biggest witch hunt of any politician in the history of the country.

Winners

Winners are safe haven assets of gold, silver, bonds and yen.  Euro is also benefiting.

Losers

Losers are stocks, commodities and the dollar.

Nothing Else Matters Today

There is a lot of other important data that we would have ordinarily brought to your attention in the Morning Capsule today.  However publishing that data today would be a waste of your time as nothing other than the special counsel appointment matters today.

Good News – You Are Correctly Positioned

If you have been following the ‘What To Do Now’ section of the Morning Capsule, your portfolio is already correctly positioned for the prevailing market conditions.  Some of the probabilities have changed.  We will do a separate post shortly to give you a better understanding and the new probabilities.  We will wait for more data to make any changes to cash levels, hedges and gold. The reason is that Trump has been a teflon president.  Trump has done many things that would have ruined the career of most politicians but nothing has affected Trump.  Is it about to change?  Let us not rush  and make judgements based on our own emotions but patiently wait for the hard data.

Technical Patterns

Several biotechs are tracing a Diamond Top.  This is bearish.  ETFs of interest are , , , and .

Several basic material stocks are also tracing a Diamond 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.  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.

Interestingly the ‘smart money’ is not buying safe haven assets of gold, bonds and yen.

Gold futures are at $1257, silver futures are at $16.72, and oil futures are $45.00.

S&P 500 resistance levels are 2363, 2400 and 2450; support levels are 2334, 2300, and 2288.

DJIA futures are down 76  points.

STOCKS FINALLY NOTICE WASHINGTON TURMOIL, RUSH INTO GOLD, DOLLAR LOSSES ALL ITS GAINS SINCE THE ELECTION

This is what you need to know today.

Washington In Turmoil

The New York Times has information from a memo written by fired FBI Director James Comey that Trump asked Comey to shut down Flynn Russia probe.  This is the deepest crisis Trump is facing as president.  Some on the fringe are talking impeachment.  Stocks notice.  The stock market has been remarkably resilient.  Yesterday we wrote:

Based on the data at The Arora Report, at this time institutions are more fearful of a melt up and missing it compared to the market falling and losing money. This is keeping the upward momentum alive. Momentum is like a fever that can ignore everything for a long time until the fever breaks. At present the fever shows no signs of breaking. However that can change if Republicans start breaking away from Trump.

Start by clicking here for the annotated chart of S&P 500 ETF SPY.   The chart shows four stages of the Trump rally.

This morning there are first signs of breaking momentum.

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

Gold Flies

Gold is flying on safe haven demand.

The momo crowd is aggressive buyer.

There is no buying by the ‘smart money.’

Dollar Losses All Its Gains Since The Election

Dollar has lost all its gains since the election.  There are a lot of gurus out saying that the confidence gained by the U. S. after Trump election is lost as evidenced by the dollar giving up the gains.

In our analysis such conclusions are flawed.  When they say dollar they mean dollar index.  Euro has a heavy weighting in dollar index.  Euro is rising after the French election.  Euro is now over $1.11, the highest level since November.

The fall in the dollar is primarily a euro story and not a Trump story.

Oil

Oil fell after API inventory data.  Inventories rose by 882K barrels vs. consensus of no increase.   As of this writing, weaker dollar is helping oil.  EIA data will be released at 10:30 am ET.  The data might be a market mover.

Technical Patterns

Several Brazilian stocks are tracing a Hanging Man.  This is a bearish pattern.  ETF of interest is .

This is powerful information and many investors use this to enter trades in addition to our official signals.  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 lower and bonds are higher on safe haven demand.

Gold futures are at $1254, silver futures are at $16.97, and oil futures are $49.04.

S&P 500 resistance levels are 2400, 2450 and 2500; support levels are 2363, 2334, and 2300.

DJIA futures are down 162  points.

GOLD HIGHER AND DOLLAR WEAKER ON ALLEGATIONS OF TRUMP REVEALING SECRETS TO RUSSIA, STOCKS AT RESISTANCE, WEAK HOUSING

This is what you need to know today.

Gold Higher And Dollar Weaker On Allegations Of Trump Revealing Secrets To Russia

There is a report out that Trump has revealed important secrets to Russia regarding ISIS. The White House has denied it.  Trump has tweeted on the subject but Washington is still in turmoil.  Gold is running up on the news .  Dollar is weaker on the news.

We will do a separate post as more developments come to light.

Stocks At Resistance

S&P 500 is at a major technical resistance of 2400.  Right now institutions seem to be more fearful of a melt up and not participating in it than losing money if the market falls.

Housing Starts

Lately housing has been strong but the latest data is disappointing.  April Housing Starts came at 1172K vs. 1255K consensus.

Building Permits are a leading indicator.  The reason is that building permits are applied for before construction starts.  Building Permits came at 1229K vs. 1270K consensus.

Technical Patterns

Silver traced an Exhaustion Bar.  This is bearish.  ETF of interest is .

This is powerful information and many investors use this to enter trades in addition to our official signals.  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 as of this writing the market is looking like it is going to open higher.

Interest rates and bonds are range bound.

Gold futures are at $1234, silver futures are at $16.74, and oil futures are $49.15.

S&P 500 resistance levels are 2400, 2450 and 2500; support levels are 2363, 2334, and 2300.

DJIA futures are up 37 points.

OIL FLYS ON SAUDI AND RUSSIA, GOLD HIGHER ON NORTH KOREA AND INDIA, FIRST NEGATIVE EMPIRE

This is what you need to know today.

Oil Rockets Up On Saudi And Russia

In Beijing, oil ministers of Saudi and Russia announced an agreement to extend oil production cuts to March 2018. Oil is flying on the news because the consensus was that the agreement would be extended by six months, instead the agreement was extended by nine months.

OPEC meeting will take place on May 24 and 25 to formally approve the deal.

Late last week, there were many calls from Wall Street and gurus that oil was going lower; there were many calls to sell short oil and to sell oil stocks.  Those who sold short are now being forced to cover at a loss.  Those who sold good oil stocks last week appear to be buying them at higher prices in the pre-market.  As is often the case, last week we were contrarians and our calls have proven spot on.

In ZYX Buy, we bought oil ETF USO and highlighted oil super major RDS.B with a 7% dividend.  In ZYX Global Multi Asset Allocation energy ETFs OIH and FCG came into our buy zones. In ZYX Emerging, Russia which is a major oil producer was in the buy zone.

Gold Higher on North Korea And India

Gold is higher on two factors.

First is North Korea conducting a missile test.  Please see detail post on North Korea from last week.

In India, jewelers will be forced to declare their gold stocks on July 1 when GST is implemented.  Indian jewelers have had a lot of gold off books. The machinations of Indian jewelers is raising gold prices.

First Negative Empire

Empire Manufacturing Index which measures manufacturing activity in the New York area came at -1 vs. +7.5 consensus.  This is the first Empire Manufacturing since Trump election.

Merkel Wins In Germany

Merkel’s party has unexpectedly won state elections in rival’s heartland.  This is being seen as positive in the medium-term.

Technical Patterns

Several large bank stocks are tracing a Hammer.  This is bullish.  ETF of interest is .

This is powerful information and many investors use this to enter trades in addition to our official signals.  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.

Interest rates, bonds and currencies are range bound.

Gold futures are at $1235, silver futures are at $16.77, and oil futures are $49.57.

S&P 500 resistance levels are 2400, 2450 and 2500; support levels are 2363, 2334, and 2300.

DJIA futures are up 46 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 27 – 38% of assets in cash or treasury bills, and short to medium-term hedges of  25% and very short term hedges of 5%.

 

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