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.
TAKE ADVANTAGE OF STRENGTH TO RAISE CASH OR HEDGES, MORE FOREIGN MONEY TO FLOW INTO CHINESE STOCKS
To gain an edge, this is what you need to know today.
Take Advantage Of Strength
There is a lot of wisdom in the old saying, ‘Buy low, sell high.’ Expect the market to open strong. This is the time to raise some more cash and increase hedges.
Please see ‘What To Do Now’ section below. At this time, the ranges for cash and hedges are not being changed. Consider raising more cash and increasing the hedges within the ranges. For example, if holding 20% cash based on your personal preference, consider going to 22%.
More Foreign Money Into Chinese Stocks
A lot of money flows into Mainland Chinese stocks based on a global benchmark set by MSCI. MSCI has just raised weighting of Mainland Chinese stocks to 20% from the present 5%. The move will happen in three steps in May, August and November.
We expect additional $80 billion of foreign money to flow into Chinese stocks.
On January 17th, ZYX Emerging upgraded Mainland Chinese stocks to Buy.
Based on our past experience, we expect a flood of emails from subscribers, who are subscribed to ZYX Emerging, asking how to invest in Mainland China. Mainland China is covered in ZYX Emerging.
Personal Income And Spending
The U. S. economy is 70% consumer based. Therefore it is important to pay attention to personal income. Personal Income came at -0.1% vs. +0.3% consensus. This is the first fall in three years.
Momo Crowd And Smart Money In Stocks
The momo crowd is buying stocks in an extremely aggressive manner in the early trade. The smart money is lightly selling into the strength.
Gold
The momo crowd is aggressively selling gold. The smart money is inactive.
Note that yesterday we downgraded gold.
Oil
The momo crowd is buying oil. The smart money is inactive.
Marijuana
There is excitement over presidential candidates and Martha Stewart. We will do a separate post. The momo crowd is buying marijuana stocks in the early trade. The smart money is inactive.
Technical Patterns
European financials are tracing a head and shoulders bottom. This is bullish. ETF of interest is EUFN.
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 up and bonds are ticking down.
Currencies are mixed.
Gold futures are at $1307, silver futures are at $15.53, and oil futures are $57.26.
S&P 500 resistance levels are 2840, 2860 and 2918; support levels are 2765, 2740 and 2700.
DJIA futures are up 159 points.
STRONG U. S. GDP BUT WEAK PMI FROM CHINA
To gain an edge, this is what you need to know today.
Strong GDP
Q4 GDP came at 2.6% vs. 2.3% consensus. This indicates that the U. S. economy is staying strong.
Initial Claims
Initial Jobless Claims came at 225K vs. 221K consensus.
China PMI
China Manufacturing PMI came at 49.2 vs. consensus of 50. A PMI below 50 indicates contraction in the economy. There has been a lot of optimism about China but this leading indicator runs against the optimism.
North Korea
President Trump walked away from a deal with North Korea. We shared with you in advance:
Trump is meeting with North Korean leader in Vietnam. It is not likely to have any effect on the markets.
That call has proven spot on.
Momo Crowd And Smart Money In Stocks
The momo crowd is buying stocks in early trade. The smart money is inactive.
Gold
The momo crowd was selling gold yesterday and continues to sell gold this morning. Smart money is inactive
Oil
The momo crowd is aggressively buying oil. 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 negative but it can easily swing positive.
Interest rates are ticking up and bonds are ticking down.
Currencies are mixed.
Gold futures are at $1323, silver futures are at $15.79, and oil futures are $57.07.
S&P 500 resistance levels are 2800, 2840 and 2860; support levels are 2765, 2740 and 2700.
DJIA futures are down 24 points.
INDIA PAKISTAN FLARE UP, UNEVEN GROWTH, BULLISH OIL DATA, MARIJUANA DRUG DATA
To gain an edge, this is what you need to know today.
India Pakistan Flare Up
Both India and Pakistan are nuclear armed neighbors. For this reason investors ought to take any conflict in this region seriously. The day after India bombed a terrorist base inside Pakistan, Pakistan attempted to bomb India’s military bases. Two Indian jets were shot down and one Pakistani jet was shot down.
The Indian rupee reversed gains and Pakistan’s stocks plunged 3% before recovering.
Fortunately ZYX Emerging downgraded India to Mild Sell from Mild Buy in the short-term on February 7th before this flare up.
Uneven Growth
The most important item that came out of Powell’s testimony in front of the Senate was that he sees uneven growth.
Powell will testify in front of the House today.
North Korea
Trump is meeting with North Korean leader in Vietnam. It is not likely to have any effect on the markets.
Cohen Testimony
President Trump’s former attorney, Cohen, will testify in front of Congress today. He is likely to call Trump a liar and a criminal. Investors should pay close attention to this testimony in case new allegations come up. If there are new allegations, it may impact the markets.
Momo Crowd And Smart Money In Stocks
The momo crowd is selling stocks. Smart money is also lightly selling stocks.
Gold
Due to India Pakistan flare up, buying would have been expected in gold. However the momo crowd is aggressively selling gold. Smart money is inactive.
Oil
API data showed that crude inventories fell by 4.2 million barrels vs. consensus of a build of 2.8 million barrels. Oil has moved up on API data.
EIA data, which is considered more reliable, will be released at 10:30 am ET.
The momo crowd is buying oil. Smart money is inactive.
Marijuana
The momo crowd is aggressively buying marijuana stocks after positive comments from GWPH on its epilepsy drug. Please note that the positive statement from GWPH contradicts other independent data which is negative.
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 negative.
Interest rates are ticking up and bonds are ticking down.
Currencies are range bound.
Gold futures are at $1328, silver futures are at $15.90, and oil futures are $56.63.
S&P 500 resistance levels are 2800, 2840 and 2860; support levels are 2765, 2740 and 2700.
DJIA futures are down 56 points.
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POWELL TESTIMONY, WEAK HOUSING STARTS, RESCHEDULING MARIJUANA
To gain an edge, this is what you need to know today.
Powell Testimony
The Fed Chair Powell will start his testimony before the Congress at 10:00 am ET. Q&A may give valuable insights for the future course of the markets. We will be carefully listening.
Weak Housing Starts
December Housing starts came at 1078K vs. 1254K consensus. This is a weak number.
On the positive side, Building Permits came at 1326K vs. 1290K consensus. Building permits is a leading indicator. Investors ought to focus on leading indicators.
In our analysis, housing starts are likely to pick up going forward.
Momo Crowd And Smart Money In Stocks
The momo crowd is buying stocks in the early trade. Smart money is lightly selling into the strength.
Gold
The momo crowd is selling gold. The smart money is inactive.
Oil
The momo crowd is selling oil. The smart money is inactive.
India
We will be watching for opportunities in India and Pakistan if there is a big dip in these stocks. India launched an air strike inside Pakistan killing 300 people in retaliation for a prior terrorist attack in India.
Marijuana
The World Health Organization (WHO) plans to recommend rescheduling marijuana to the least restrictive classification. This is very good news.
Moreover, WHO wants to eliminate international controls over cannabidiol. Such a move will make it easier to export and import.
Aurora Cannabis (ACB) is getting positive sentiment over buying interest in a Portuguese firm and setting up a facility in Portugal.
Technical Patterns
European shares are tracing a head and shoulder bottom. This is bullish. ETF of interest is FEZ.
Utilities are tracing an engulfing line. This is bearish. ETF of interest is XLU.
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, bonds and currencies are range bound.
Gold futures are at $1329, silver futures are at $15.93, and oil futures are $55.61.
S&P 500 resistance levels are 2800, 2840 and 2860; support levels are 2765, 2740 and 2700.
DJIA futures are down 128 points.
TRUMP SENDS CHINESE STOCKS UP 5.6% AND OIL LOWER
To gain an edge, this is what you need to know today.
Tariffs Delayed
Trump has delayed new tariffs on Chinese goods. The enthusiasm has sent Chinese stocks up 5.6%. Chinese stocks are up now 20% from January 3rd low.
Momo Crowd And Smart Money In Stocks
The momo crowd is aggressively buying stocks in the early trade. Smart money is lightly selling into the strength.
Gold
Trading in gold is listless. There is no discernable momo crowd or smart money activity.
Oil
A tweet from Trump has sent oil lower. The momo crowd is selling oil. Smart money is inactive.
Marijuana
Unlike recent days, the momo crowd is not uniformly buying marijuana stocks. This is due to a broker issuing different calls on different 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 about 200 points higher.
Interest rates are ticking up and bonds are ticking down.
Currencies are range bound.
Gold futures are at $1332, silver futures are at $15.88, and oil futures are $56.11.
S&P 500 resistance levels are 2840, 2860 and 2918; support levels are 2800, 2765 and 2740.
DJIA futures are up 196 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% – 31% and short to medium-term hedges of 5% – 15% and short term hedges of 5%.
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