WEEKLY MARKET DIGEST: THE $1.5 TRILLION PROBLEM CAUSES JITTERS IN STOCKS, GOLD AND OIL SUPPORTED $DIA $GLD $QQQ $SLV $SPY $TBF $TBT $USO

WEEKLY MARKET DIGEST: THE $1.5 TRILLION PROBLEM CAUSES JITTERS IN STOCKS, GOLD AND OIL SUPPORTED $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.

THE $1.5 TRILLION PROBLEM CAUSES JITTERS IN STOCKS, GOLD AND OIL SUPPORTED

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

The $1.5 Trillion Problem

Traditionally Republicans have been against big deficits.  Now things have changed. The zeal to cut taxes has overtaken the concern for deficits.  If the tax bill were to raise deficits more than $1.5 trillion over a 10-year period, it will need 60 votes to pass in the Senate.  Since Republicans do not have 60 votes, they have to keep deficit under $1.5 trillion.  This is causing problems for all the tax cuts Republicans want.

Stock Jitters

The stock market is finally beginning to pay attention to the $1.5 trillion problem.  This is causing jitters.

Gold

There is light selling in gold but overall gold is still well supported on dips.

Oil

There continues to be optimism in oil over Saudi policies.

Technical Patterns

Several mining and metal stocks are tracing a Head and Shoulders.  This is bearish.  ETF of interest is XME.

Several biotechs are tracing Flags.  This is bearish.  ETF of interest is XBI.

Several European financials are tracing a Hammer. 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 negative.

Interest rates are ticking up and bonds are ticking down.

Currencies are range bound.

Gold futures are at $1284, silver futures are at $17.04, and oil futures are $57.20.

S&P 500 resistance level is 2615; support levels are 2550, 2500 and 2450.

DJIA futures are down 18  points.

REVERSAL IN JAPANESE STOCKS CAUSING MILD JITTERS, WEAKNESS IN DOLLAR ON TRUMP RHETORIC SUPPORTS GOLD, JOBLESS CLAIMS

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

Reversal In Japanese Stocks

Japanese stocks opened gap up amid optimism, they first moved up on strong buying but then failed to hold the gains and reversed.  This price action is not common these days.  This has set mild jitters across the globe.

Stocks

Mild jitters from reversal in Japanese stocks is showing up in early trade in the United States.  The momo (momentum) crowd is selling.  The ‘smart money’ is also mildly selling.

Gold

Trump’s rhetoric about trade with China is weakening the dollar.  Gold moves inverse to the dollar;  for this reason gold is stronger.

Oil

According to the EIA data, U. S. production is now at its highest since 1983.  Inventories unexpectedly rose 2.2 million barrels vs. consensus of a draw.  After a brief dip, oil is still levitating on developments in Saudi Arabia.

Initial Jobless Claims

Initial Jobless Claims came at 239K vs. 231K consensus.  This is a leading indicator and carries a heavy weight in our timing models.

Technical Patterns

Indian shares are tracing an Inside Bar.  This is bullish.  ETF of interest is EPI.

Oil is tracing an Outside Bar.  This is normally bearish, but oil right now is driven by geopolitical developments and not technicals.  ETF of interest is USO.

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.

Gold futures are at $1287, silver futures are at $17.12, and oil futures are $56.93.

S&P 500 resistance level is 2615; support levels are 2550, 2500 and 2450.

DJIA futures are down 86  points.

AGGRESSIVE SELLING IN TAX REFORM PROXY, CONCERN OVER DEMOCRAT WINS

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

Aggressive Selling In Tax Reform Proxy

The market has been using small cap index Russell 2000 as a proxy for the benefits from tax reform.  Russell 2000 is represented by popular ETF IWM.  Yesterday this proxy was  aggressively sold by the ‘smart money.’

The interpretation is that the smart money has some concerns about tax reform either getting bogged down or being passed in a manner that is not most beneficial.  On the flip side, the momo (momentum) crowd is oblivious to wrangling about tax reform in Washington and continues to buy aggressively.

Democrat Wins Cause Concern

Democrats win key governor races in Virginia and New Jersey.  Republicans had high hopes for Virginia.  These Democrat wins are causing concern that some Republicans in the Congress with an eye on the mid-term elections may not tow the line of Trump agenda.

The smart money is again lightly selling in the early trade while the momo crowd is aggressively buying.

Gold

Gold continues to be supported by weaker dollar, North Korea and Saudi concerns.

Oil

API inventory draw came at 1.562 million barrels vs. 2.7 million barrel consensus.  This caused some selling in oil.  However the momo crowd bought the dip.  The smart money is inactive.

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

Technical Patterns

Several technology stocks are tracing a Hanging Man.  This is bearish.  ETF of interest is XLK.

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 after a strong performance.

Gold futures are at $1281, silver futures are at $17.04, and oil futures are $56.99.

S&P 500 resistance level is 2615; support levels are 2550, 2500 and 2450.

DJIA futures are down 2  points.

SAUDI ACCUSES IRAN OF ACT OF WAR, MOMO OBLIVIOUS AND BUYS STOCKS BUT SMART MONEY LIGHTLY SELLS

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

Saudi Accuses Iran Of Act Of War

Saudi has increased stakes by accusing Iran of act of war by supplying missiles to Yemeni rebels.  This is coming on top of Saudi arresting several members of its elite.

Stocks

The ‘smart money’ is clearly concerned as it is lightly selling stocks.  The momo (momentum) crowd is oblivious and still aggressively buying stocks.

Gold

The dollar is stronger.  This is causing mild pressure on gold.  The momo crowd is selling gold.  However the  smart money is lightly buying gold.

Oil

Oil has decisively broken major resistance at $56 and is hitting new highs.  In addition to the spike in oil based on what is happening in Saudi, OPEC has just raised its projections for oil demand.  Both the smart money and momo crowd are buying oil.

Technical Patterns

There are several bullish patterns in oil, natural gas and energy equities.  ETFs of interest are USO, UWT, XLE, XOP, OIH and FCG.

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.

Bonds are ticking up and interest rates are ticking down.

Gold futures are at $1277, silver futures are at $17.08, and oil futures are $57.27.

S&P 500 resistance level is 2615; support levels are 2550, 2500 and 2450.

DJIA futures are up 15 points.

SAUDI PURGE SUPPORTS OIL, GOLD AND BONDS BUT STOCK MOMO UNCONCERNED; TRUMP TACKLES TRADE ISSUES

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

Saudi Purge

Saudi Crown Prince Salman has consolidated his power by arresting several members of Saudi elite.

Trump Tackles Trade Issues

Trump is in Asia tackling trade issues.  It appears that so far Trump has been unsuccessful in Japan.  Prudent investors are carefully watching the developments in Asia.

Gold And Bonds

Gold and bonds are being supported by the purge in Saudi and Trump in Asia.

Oil

Salman’s policy has been OPEC production cuts.  As Salman gains more power, this is positive for oil.

Stocks

The momo crowd is oblivious to trade issues and the Saudi purge.  It continues to buy stocks this morning but not as aggressively as they have last week.  The ‘smart money’ is a light seller.

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.

Gold futures are at $1272, silver futures are at $16.87, and oil futures are $55.71.

S&P 500 resistance level is 2615; support levels are 2550, 2500 and 2450.

DJIA futures are up 24  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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