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.
MOMO BUYS ON PROSPECTS OF MINI TRADE DEAL, RETAIL SALES
To gain an edge, this is what you need to know today.
Mini Trade Deal
China is looking to narrow the scope of trade deal. Yesterday morning there was a report that the White House is planning for a mini trade deal. The market ran up on the news. Subsequently the report was denied and the market fell. Then the speculation built again about the mini trade deal lifting the market up.
After the market close, Trump said that he prefers a full deal to a mini deal.
This morning there is optimism as the speculation of a mini trade deal builds.
Retail Sales
August Retail Sales Ex-auto came at 0.0% vs. 0.2% consensus. July Retail Sales were really hot, a little cooling in August is not a cause for concern.
Momo Crowd And Smart Money In Stocks
The momo crowd is aggressively buying stocks. Smart money is lightly selling into the strength.
Gold
There is no discernable momo crowd or smart money activity in gold.
Oil
The momo crowd is buying oil. Smart money is inactive.
Marijuana
The momo crowd is lightly buying marijuana stocks. Smart money is inactive.
Technical Patterns
Retail stocks have traced an engulfing line. This is bearish. ETF of interest is XRT.
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. This indicator, with a great track record, is popular among long term investors to stay in tune with the market and among short term traders to independently undertake quick trades.
Interest rates are ticking up and bonds are ticking down.
Dollar is slightly weaker.
Gold futures are at $1507, silver futures are at $18.08, and oil futures are $55.21.
S&P 500 resistance levels are 3020, 3050 and 3100; support levels are 2950, 2925 and 2918.
DJIA futures are up 66 points.
‘SUPER MARIO’S’ NEW FEAT HELPS TRUMP AGAINST THE ‘BONEHEADS’
To gain an edge, this is what you need to know today.
Stimulus From ECB
President Trump has called for the Fed’s ‘Boneheads’ to cut interest rates. Now Trump has more ammunition against the Fed from the new feat of ‘Super Mario.’ Super Mario is European Central Bank’s (ECB) President Mario Draghi. Draghi is known as Super Mario for negative interest rates and buying most bonds in Europe than were easily buyable. ECB has announced a new rate cut and more bond buying. The new stimulus is in line with the consensus. Let’s examine with the help of two charts.
The charts
Please click here for an annotated chart of long bond ETF (TLT).
Please click here for an annotated chart of S&P 500 ETF (SPY) which mirrors the S&P 500 Index (SPX). Similar conclusions can be reached from charts of the Dow Jones Industrial Average (DJIA) and Nasdaq 100 ETF (QQQ). For the sake of full transparency, this chart was previously published and no changes have been made.
Note the following:
- The first chart shows that bonds traced a parabolic move on recession fears.
- The first chart shows that The Arora Report gave a sell signal on ETF TLT at a time when almost everybody was expecting ETF TLT to go higher. With the benefit of hindsight now, The Arora Report signal to short sell bonds has proven spot on. At the same time, a signal was given to buy inverse bond ETF (TBT) for those who could not short sell. Both trades are now nicely profitable.
- The first chart shows that at a time when bonds were rocketing up, RSI was showing divergences.
- The second chart shows a megaphone pattern. At the time the chart was first published, many gurus and media were using this chart to proclaim that the stock market was about to fall out of bed. The Arora Report took the opposite position saying that the upside move was possible. That call has turned out to be spot on.
- Gold ETF (GLD), silver ETF (SLV) and gold miner ETF (GDX) are moving higher on the ECB news.
- ECB news along with Trump’s decision to postpone new higher tariffs on China by two weeks are helping the stock market as of this writing. However note that the stock market is now overbought in the short term. Overbought markets tend to be vulnerable.
- Apple (AAPL) stock has moved up after the introduction of new iPhones and lower than anticipated price on its streaming service.
- The carnage in cloud stocks has temporarily stopped.
- Short squeezes in laggard retail and energy stocks are showing signs of easing according to algorithms at The Arora Report
Momo Crowd And Smart Money In Stocks
The momo crowd is buying stocks in the early trade. Smart money is light selling into the strength.
Gold
The momo crowd is buying gold and silver. Smart money is inactive.
Oil
The momo crowd is aggressively selling oil as The Street catches up with Bolton leaving. Smart money is inactive.
Marijuana
ACB earnings were below the consensus and whisper numbers. The momo crowd is selling marijuana stocks. 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 and can easily turn negative but expect the market to open significantly higher. This indicator, with a great track record, is popular among long term investors to stay in tune with the market and among short term traders to independently undertake quick trades.
Interest rates are ticking down and bonds are ticking up.
The dollar is stronger.
Gold futures are at $1526, silver futures are at $18.34, and oil futures are $54.25.
S&P 500 resistance levels are 3020, 3050 and 3100; support levels are 2950, 2925 and 2918.
DJIA futures are up 70 points.
HOTTER PRODUCER PRICES, WAIT FOR ‘SUPER MARIO’
To gain an edge, this is what you need to know today.
Hotter PPI
Core Producer Price Index (PPI) came at 0.3% vs. 0.1% consensus. Prices have been rising at producer level but they have not been passed on to consumers. Let us see how long this can last without hurting corporate profits.
Also keep in mind the main bullish argument for stock and bond markets as well as for lowering interest rates is that there is no inflation.
Wait For ‘Super Mario’
Markets are anxiously waiting for European Central Bank (ECB) decisions tomorrow morning. Please see Monday’s Morning Capsule.
Momo Crowd And Smart Money In Stocks
The momo crowd is lightly buying stocks in the early trade. Smart money is inactive.
Gold
There is no discernable momo crowd or smart money activity in gold. Gold is hovering around $1,500. Bulls have not been able to rally it, bears have not been able to break it.
Oil
API data showed inventory draw of 7.227 million barrels vs. 2.6 million barrel draw consensus. This data is bullish. Oil is seeing significant buying on this data.
EIA data will be released at 10:30 am ET.
The momo crowd is buying oil. Smart money is lightly selling into the strength.
Marijuana
ACB will report earnings after the close. ACB is expected to report a loss of $0.05 per share and a revenue of $107.9 million. Commentary about the future will be most important.
The momo crowd is lightly buying marijuana stocks in the early trade. 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 can easily swing either way. This indicator, with a great track record, is popular among long term investors to stay in tune with the market and among short term traders to independently undertake quick trades.
Interest rates are ticking up and bonds are ticking down.
The dollar is stronger.
Gold futures are at $1500, silver futures are at $18.22, and oil futures are $57.90.
S&P 500 resistance levels are 3020, 3050 and 3100; support levels are 2950, 2925 and 2918.
DJIA futures are up 44 points.
SELLING IN STOCKS ON CHINA FACTORY DATA, ROTATION OUT OF CLOUD STOCKS, GOLD FALLS
To gain an edge, this is what you need to know today.
Biggest Fall In Three Years
Factory-gate prices fell the biggest in three years in China. Prices shrank 0.9% year-on-year last month vs. consensus of -0.8%.
The Consumer Price Index (CPI) in China came at 2.8% vs. 2.6% consensus.
The contraction in factory-gate prices shows that the U. S. tariffs are beginning to hurt China. Markets are concerned. This has caused light selling in stocks across the globe and is now negatively affecting the stock market open in the U. S.
Cloud Stocks
There is a rotation out of cloud stocks. The rotation is not a surprise. The momo crowd has run up cloud stocks to unsustainable valuations. Prices of these stocks will have to fall by another 30-50% before they become fundamentally attractive.
Many explanations are being advanced for the rotation out of cloud stocks. Instead of sharing all of these explanations, we will share with you the reality. The reality is that once the momentum reversed, the momo crowd started selling. It is that simple.
Short sellers now have reasonably big gains in cloud stocks. If short sellers start to buy-to-cover, this will generate an upward momentum. Once the upward momentum starts, the momo crowd will stop selling and start buying these stocks again. There may be short term trading opportunities but these opportunities must first be filtered through the high risk of such trades. If after risk adjustment there are opportunities, they will be posted on ZYX Buy or ZYX Short.
Momo Crowd And Smart Money In Stocks
The momo crowd is selling stocks in the early trade. Smart money is inactive.
Gold
We have been sharing with you that gold and silver had been over bought. The selling continues to relieve the over bought condition.
The momo crowd is selling gold. Smart money is inactive.
Gold is now in the support zone.
Oil
Oil continues to rise on Saudi shake up. The momo crowd is aggressively buying oil. Smart money is lightly selling oil.
Marijuana
There is no discernable smart money or momo crowd activity in marijuana. Vaping related deaths are causing a negative sentiment and are, in part, responsible for stopping the rally.
Technical Patterns
Small-cap gold stocks are tracing a double top. This is bearish. ETF of interest is GDXJ. However before taking this trade, keep in mind that gold is now at a support zone and may bounce from here. If gold bounces, it will negate this bearish pattern and GDXJ will also bounce.
Long bond is tracing a double top. This is bearish. ETF of interest is TLT. There is also inverse ETF TBT that goes up when bonds go down.
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. This indicator, with a great track record, is popular among long term investors to stay in tune with the market and among short term traders to independently undertake quick trades.
Interest rates are ticking up and bonds are ticking down.
The dollar is stronger.
Gold futures are at $1502, silver futures are at $18.03, and oil futures are $58.52.
S&P 500 resistance levels are 3020, 3050 and 3100; support levels are 2950, 2925 and 2918.
DJIA futures are down 46 points.
OPTIMISM AMONG BULLS ANTICIPATING THE NEXT GREAT FEAT FROM ‘SUPER MARIO’
To gain an edge, this is what you need to know today.
‘Super Mario’
‘Super Mario’ is Mario Draghi, head of the European Central Bank (ECB). ECB will announce its policy decision on Thursday. Draghi is known as super Mario because he brought negative interest rates and QE to Europe. Bulls are expecting him to lower interest rates and buy more bonds. The optimism is spreading across the globe including the U. S.
Keep in mind the following two points:
- Interest rates are already negative.
- ECB has already bought most of the bonds that are easily buyable.
Momo Crowd And Smart Money In Stocks
The momo crowd is buying stocks in the early trade. Smart money is inactive.
Gold
The momo crowd is acting like a yo-yo in gold. Smart money is inactive.
Oil
The momo crowd is buying oil after the Saudi king replaces the oil minister. Smart money is inactive.
Marijuana
The momo crowd is aggressively buying marijuana stocks. 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. This indicator, with a great track record, is popular among long term investors to stay in tune with the market and among short term traders to independently undertake quick trades.
Interest rates are ticking up and bonds are ticking down.
The dollar is slightly weaker.
Gold futures are at $1521, silver futures are at $18.20, and oil futures are $57.64.
S&P 500 resistance levels are 3020, 3050 and 3100; support levels are 2950, 2925 and 2918.
DJIA futures are up 65 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 22% – 32% and short to medium-term hedges of 5% – 15% and short term hedges of 5% – 15%.
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