WEEKLY MARKET DIGEST: THE THREAT OF DISINFLATION SPOOKS THE MARKET, SMART MONEY BUYS GOLD $GLD $SLV $USO $DIA $SPY $QQQ $TBF $TBT

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(The Weekly Digest reproduces the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers. ) 

THE THREAT OF DISINFLATION SPOOKS THE MARKET, SMART MONEY BUYS GOLD

January 31, 2014

In early trading, U. S. stocks are being spooked by the threat of disinflation coming from Europe.  In the Euro block, consumer prices rose by 0.7% year on year in January vs. consensus of 0.9%.  Europe is clearly suffering from disinflation.  This spooked the markets in Europe and the down draft is being carried on to the U. S.

For the first time in awhile, our algorithms are detecting Smart Money buying gold and silver.  On the surface it may seem strange because gold is a hedge against inflation and typically gold goes down in periods of disinflation.  However, it is important to remember that gold is also a hedge against instability.  Buying of gold by Smart Money indicates that Smart Money is fearful of instability potentially caused by disinflation.

Interest rates are falling on the prospect of disinflation.

Oil is giving up yesterday’s gains.

Gold futures are at $1250, silver futures are at $19.44, and oil futures are $97.24.

S&P 500 resistance levels are 1800, 1825, and 1837; support levels are 1750, 1725, and 1710.

DJIA futures are down 158 points.

THE FED UPBEAT, GOLD FALLS

January 30, 2014

The Fed in its statement yesterday was upbeat and carried through with the taper as expected. Gold should have fallen on the news but the momo crowd started buying and ran gold up over $1260.  This is when Smart Money stepped in and started buying. Earlier this morning gold briefly broke $1240 to the downside.

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Advanced Q4 GDP came at 3.2% vs. consensus of 3%.

Stocks are still overbought in the long-term, but are very oversold in the very, very short-term.  Typically this condition leads to a short-term rally.

Interest rates are rising.

Oil prices are spiking as more heating oil is being used.

Gold futures are at $1241, silver futures are at $19.09, and oil futures are $98.15.

S&P 500 resistance levels are 1800, 1825, and 1837; support levels are 1766, 1750, and 1725.

DJIA futures are up 93 points.

STOCKS FALL AND GOLD RISES ON DISAPPOINT FROM SOUTH AFRICA, THE FED ON TAP

January 29, 2014

Stocks are falling and gold is rising on disappoint from South Africa.  South Africa  South Africa raised repo rate 0.5% to 5.5% to support its currency rand.  Market was expecting a bigger raise. something similar to Turkey which rated one of its interest rates by 5%.  Previously India also raised interest rate.

The real development to watch is the Fed announcement this afternoon.  The consensus is that the Fed will taper by another $10 billion.  There is also strong speculation that the forward guidance will weaken the bond with the unemployment rate.

If the actual announcement is much different, expect strong volatility.

Gold futures are at $1267, silver futures are at $19.89, and oil futures are $96.71.

S&P 500 resistance levels are 1800, 1825, and 1837; support levels are 1766, 1750, and 1725.

DJIA futures are down 152 points.

DISAPPOINTING DURABLE GOODS DATA SCUTTLES EARLY RALLY ATTEMPT IN STOCKS

January 28, 2014

Disappointing  durable goods data has scuttled early rally attempt in stocks.

See also  MOMO CROWD WANTS THE FED TO BOW TO THEM, WHAT HAPPENS TO THE STOCK MARKET IF THE FED DISAPPOINTS?

December Durable Goods ex-transports came at -1.6% vs. 0.6% consensus.

Interest rates are falling in response to bad durable goods data.

Oil is attempting a rally.

Trading in gold and silver is mostly range bound.

Gold futures are at $1257, silver futures are at $19.73, and oil futures are $96.56.

S&P 500 resistance levels are 1800, 1825, and 1837; support levels are 1775, 1766, and 1750.

DJIA futures are up 37 points.

EMERGING MARKET COMPARISONS TO 1997 ARE MISPLACED

January 27, 2014

Last week markets fell on concerns about emerging market currencies.  Many gurus poured gasoline on the fire by warning of a global crisis similar to 1997 that was started with the fall in Thai bhat.  These gurus are simply wrong in comparing 2014 to 1997.  In 1997, most of the emerging markets debt was in U. S. dollars.  Therefore, they were exposed to a double whammy as their currencies fell.  In 2014, most of the emerging markets debt is in their local currencies, therefore the impact of falling currency is nowhere near as severe.  As a matter of fact, falling currency makes exports from the country more competitive.

Gold is giving up some of its gains.

Oil is range bound.

Interest rates are steady.

Stocks may stage a rally attempt.

Gold futures are at $1262, silver futures are at $19.83, and oil futures are $97.

S&P 500 resistance levels are 1800, 1825, and 1837; support levels are 1775, 1766, and 1750.

DJIA futures are up 30 points.

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