WEEKLY MARKET DIGEST: TAX REFORM, STOCK BUYING, PERVERSE REACTION TO HIGHER INTEREST RATES IN GOLD $DIA $GLD $QQQ $SLV $SPY $BTC.X $USO

WEEKLY MARKET DIGEST: TAX REFORM, STOCK BUYING, PERVERSE REACTION TO HIGHER INTEREST RATES IN GOLD AND BONDS $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.

TAX DRAMA, AGGRESSIVE BUYING OF STOCKS, GOLD HIGHER, INTEREST RATE CHANGES IN RUSSIA AND MEXICO, SOUTH AFRICA KEY MEETING

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

Tax Drama

Republicans are set to unveil the final tax plan today. Several Senators are grandstanding, perhaps to be in a better negotiating position to make last minute changes.  Consensus is that the tax reform will have enough votes.  However if this turns out not to be true, the stock market may plunge.

Aggressive Buying In Stocks

The momo crowd is aggressively buying stocks in the early trade.  The ‘smart money’ is inactive.

Gold Higher

Aggressive buying by the momo crowd in gold continues.  The smart money is inactive.

Russia

Russia is cutting interest rates by 0.25%.

Mexico

Mexico is raising interest rates by 0.25%.

South Africa

The ruling African National Congress  meets this weekend to elect a new leader.  This may be the start of a new bull market in South Africa

Technical Patterns

Brazilian stocks are tracing a Symmetrical Continuation Triangle.  This is bearish.  ETFs of interest are EWZ and BZQ.

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.

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

Oil is stronger.

Currencies are range bound.

Gold futures are at $1261, silver futures are at $16.09, and oil futures are $57.35.

S&P 500 resistance levels are 2661 and 2688; support levels are 2631, 2615, and 2594.

DJIA futures are up 69 points.

THREE RATE HIKES IN 2018, PERVERSE REACTION IN BONDS AND DOLLAR BUT GOLD AND STOCKS AS EXPECTED, TAX PLAN

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

Three Rate Hikes

The Fed raised interest rates by 0.25% as expected.  Now the consensus is of three rate hikes next year.

ECB

European Central Bank left rates unchanged and is likely to continue on the present policy course as it provides dovish guidance.

Perverse Reaction In Bonds And Dollar

Higher interest rates are supposed to be good for the dollar but bad for bonds.  In a perverse reaction, bonds went up and dollar went down on Fed raising interest rates. This is due to the market mechanics related to position of the street ahead of the announcement.

Gold And Stocks React As Expected

Both gold and stocks are under control of the momo crowd.  Historically the momo crowd buys  gold and stocks on most Fed announcements.  This time is no different.

Good Economic Data

Initial Jobless Claims came at 225K vs. 239K consensus.

Retail Sales Ex-auto came at 1% vs. 0.6% consensus.

Tax Plan

Republicans have reached agreement on the tax plan.  The momo crowd is buying stocks aggressively on the news. However investors ought to be aware of a potential ‘buy the rumor, sell the news’ reaction later today and over the coming days.

Oil

Oil is under pressure as there is concern about lower than expected demand for gasoline.

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.

Gold futures are at $1255, silver futures are at $15.96, and oil futures are $56.28.

S&P 500 resistance level is 2688; support levels are 2661, 2631, and 2615.

DJIA futures are up 29 points.

INFLATION PICKS UP, FED DAY, AGGRESSIVE BUYING IN STOCKS, OIL PIPELINE REPAIR

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

Inflation Picks Up

Over the last several months, we have been sharing with you that inflation is beginning to heat up at the producer level but is not being passed on to the consumer.  The data just released shows that the foregoing may be about to change.  Consumer Price Index (CPI) came at 0.4% vs. 0.4% consensus but one of the higher numbers in recent months.  However Core CPI came at 0.1% vs. 0.2% consensus.  All investors ought to keep a careful watch on the inflation data.  We routinely publish the important statistics in the Morning Capsule.

Fed Day

The Fed will announce its policy decision this afternoon.  The consensus is that the Fed will raise rates by 0.25%.  We will carefully be reading the tea leaves for the future monetary policy.

Please stay extra alert between 2:00 pm and 3:30 pm ET in case there are opportunities.  There will be posts only if there are opportunities.

Stocks

The momo crowd is aggressively buying stocks in the early trade.  The ‘smart money’ is inactive.

Oil

It turns out that the crack in the pipeline that we shared with you yesterday morning is likely to be repaired in a matter of days.  This is putting pressure on oil prices from the spike yesterday.  Yesterday morning the expectations were that the repair would take weeks.

EIA inventory data will be released at 10:30 am ET.

API data showed crude inventories fell by 7.4 million barrels vs. consensus of 3.8 million barrels decline.

Gold

In the long-term, inflation is good for gold.  Consistent with their normal pattern, the momo crowd is aggressively buying gold ahead of the Fed meeting.

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.

Interest rates are ticking down and bonds are ticking up.

Dollar is weaker.

Gold futures are at $1247, silver futures are at $15.77, and oil futures are $57.52.

S&P 500 resistance level is 2688; support levels are 2661, 2631, and 2615.

DJIA futures are up 17 points.

BRENT CRUDE SPIKES, AGGRESSIVE MOMO BUYING IN STOCKS

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

Brent Crude Spikes

Brent crude oil, the major oil benchmark outside the United States, spiked to over $65 for the first time since June 2015.  The reason is that an important pipeline in the North Sea has been shut due to a crack.

Stocks

The momo crowd continues to aggressively buy stocks in the early trade.  However the ‘smart money’ is a light seller.

Gold

Money continues to flow out of gold and into bitcoin. Gold is under slight pressure with listless trading.

Inflation

Core Producer Price Index came at 0.3% vs. 0.2%.  This inflation data is hotter than expected but this market is likely to ignore it because lately inflation at the producer level is not being passed on to consumers.

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.

Interest rates are ticking up and bonds are ticking down.

Currencies are range bound.

Gold futures are at $1241, silver futures are at $15.67, and oil futures are $58.32.

S&P 500 resistance level is  2688; support levels are 2661, 2631, and 2615.

DJIA futures are up 65 points.

FED AND ECB MEETINGS AHEAD, PLAN TO END OIL GLUT

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

Stocks

The momo crowd is aggressively buying stocks in the early trade. The smart money is inactive.

Fed Meeting

Fed meeting is ahead.  Consensus is that the Fed will raise interest rates by 0.25 points.  We will be carefully watching for signs of future changes in monetary policy.

ECB

European Central Bank, Swiss National Bank and Bank of England also meet this week. ECB is the most important.  Interest rates are likely to be left unchanged but we will be paying close attention to any forward guidance.

Oil Glut

The oil ministers of Kuwait and UAE are out saying that OPEC is working with Russia to end oil glut.  The momo crowd is buying on the news.

Gold

Trading in gold is listless.  Typical pattern is for the momo crowd to run up gold ahead of the Fed meeting. However this time may be different as there is near certainty of a rate hike and higher rates are bad for gold.  Given that momo crowd is not known to pay attention to fundamentals, there may be a very, very short-term high risk trade if gold starts moving over $1252 – $1256. Due to very high risk, we may chose not to give a signal but some aggressive investors may be able to take advantage of this information.

Bitcoin

Bitcoin futures have been launched.  There is a lot of enthusiasm.  Some of the enthusiasm is spilling into bitcoin related stocks this morning.  Last week a post was published on these stocks in ZYX Buy.  Also a new SIGNAL LIMITED post has been given on ZYX Buy.  We will also be doing a separate insightful post on bitcoin futures.  At one point bitcoin futures were up 26% and have typically been trading at a premium to bitcoin.

Technical Patterns

Brazilian stocks are tracing a Continuation Triangle.  This is bearish. ETFs of interest are EWZ and BZQ.

Stocks in Thailand are tracing a Hanging Man. This is bearish.  ETF of interest is THD.

French stocks are tracing a Continuation Diamond.  This is bullish.  ETF of interest is EWQ.

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.

Interest rates, bonds and currencies are range bound.

Gold futures are at $1248, silver futures are at $15.78, and oil futures are $57.51.

S&P 500 resistance levels are 2661 and 2688; support levels are 2631, 2615, and 2594.

DJIA futures are up 42 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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