WEEKLY MARKET DIGEST: TRADE DEFICIT WITH CHINA HITS A RECORD BUT MEDIA AND MARKET IGNORING IT $DIA $GLD $QQQ $SLV $SPY $TBT $USO

WEEKLY MARKET DIGEST: TRADE DEFICIT WITH CHINA HITS A RECORD BUT MEDIA AND MARKET IGNORING IT $DIA $GLD $QQQ $SLV $SPY $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.

TRADE DEFICIT WITH CHINA HITS A RECORD BUT MEDIA AND MARKET IGNORING IT

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

China Trade Surplus

For June, China had $28.97 billion trade surplus with the U. S.  This is the highest of any month going back to 1999.

As of this writing, the media as well as the market is ignoring this new data.  As the day progresses, if the media starts paying attention to this data it may become difficult for the stock market to ignore it.

India And China

India has warned China that the $63 billion trade deficit in China’s  favor is untenable.

Key Technical Level

2800 in S&P 500 is a key technical level for the stock market.  Yesterday the market was knocking at this level with most bullish gurus making pronouncements that the bank earnings this morning would push the market to new highs.

In the early trade, the market is fluctuating around this level.

Bank Earnings

Four big banks JPM, C, WFC and PNC have reported earnings.  Overall the earnings are mixed relative to the consensus numbers and the whisper numbers.

Momo Crowd And Smart Money In Stocks

The momo crowd is buying stocks in the early trade.  The momo crowd was an aggressive buyer throughout yesterday.

The smart money is inactive.

Gold

The momo crowd is aggressively selling gold. The smart money is inactive.

Oil

Trading in oil is listless.

Rig data will be released at 1:00 pm ET and  may be a market mover.

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 undeterminable at this time. If 2800 level on S&P 500 is broken decisively, expect the market to accelerate up.  On the other hand if there is a failure to breakout here, it will be a negative.

Dollar is slightly weaker.

Interest rates are ticking down and bonds are ticking up.

Gold futures are at $1242, silver futures are at $15.85, and oil futures are $70.44.

S&P 500 resistance levels are 2800, 2840 and 2860; support levels are 2765, 2740 and 2700.

DJIA futures are up 12 points.

OPTIMISM ON POTENTIAL TALKS WITH CHINA ON TRADE

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

Optimism On Potential Talks With China On Trade

This morning there is optimism on potential talks with China on trade.  Wang Shouwen, Vice Minister of Commerce, said that China and U. S. should talk about trade problems.  This statement immediately caused aggressive buying in futures.  Slowly the buying has been accelerating.

Consumer Price Index

Core Consumer Price Index (CPI) came at 0.2% vs. 0.2% consensus.  This indicates that inflation at the producer level is still not being passed on to the consumers.

Initial Claims

Initial Unemployment Claims came at 214K vs. 225K consensus.  This is a leading indicator and carries heavy weight in our models.  The data shows that the employment picture continues to be very strong.

Momo Crowd And Smart Money In Stocks

After aggressively selling stocks yesterday, the momo crowd is aggressively buying stocks this morning.  The smart money is inactive.

Gold

Gold is stabilizing after selling by the momo crowd yesterday.  This morning the momo crowd is lightly buying.  The smart money is inactive.

Oil

IEA is out with a very bullish report on oil claiming that if there are outages, there is not enough spare capacity.  This report has halted the aggressive selling in oil that occurred yesterday.  Aggressive selling in oil occurred on bearish inventory data and Libya coming on line sooner than expected.

Technical Patterns

S&P 500 traces an Island Top. This is bearish.  ETF of interest is SPY.  However, please note that this pattern will be negated if the rally being seen in the pre-market continues.

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, dollar and bonds are range bound.

Gold futures are at $1245, silver futures are at $15.92, and oil futures are $70.86.

S&P 500 resistance levels are 2800, 2840 and 2860; support levels are 2765, 2740 and 2700.

DJIA futures are up 197  points.

THINK TWICE BEFORE FOLLOWING THE MOMO CROWD ON TRADE WAR AS TRUMP AIMS TO WIN, HOTTER INFLATION DATA

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

Trump Aims To Win

The momo (momentum) crowd ran up the stock market from support to resistance ignoring Trump on the trade war. Now the momo crowd is finding that Trump aims to win the trade war. Following the momentum and ignoring the risks of the trade war is not a prudent strategy.

Think twice before following the momo crowd if you are a prudent investor. The momo crowd often gets whip sawed. Let us examine with a chart.

Please click here for an annotated chart of S&P 500 ETF (SPY). Similar conclusions can be drawn from the charts of Dow Jones Industrial Average (DJIA), Nasdaq 100 ETF (QQQ) and small cap ETF (IWM). Please observe the following from the chart:

  • The chart shows the trend line that has acted as support three times.
  • The chart shows the resistance that has previously stopped the stock market advance three times, not including this attempt.
  • The chart shows the momo crowd buying ahead of the $16 billion of tariffs going into effect.
  • The chart shows the momo crowd buying when the tariffs were actually imposed and on the jobs report. The jobs report was better than the consensus numbers but in line with the whisper numbers.
  • The chart shows round-robin buying. In round-robin buying, stocks in Asia were bought because the stocks in the U. S. were up. Stocks in Europe were bought because stocks in Asia were up. Subsequently stocks in the U. S. were bought because stocks in Europe and Asia were up. Yes, this sounds silly but that is what the momo crowd often does.
  • From the chart, please note that the momo crowd ran up the stocks from support to resistance ignoring the trade war.
  • The chart shows new tariffs coming into the picture as the Trump administration releases a list of goods worth $200 billion for new tariffs on Chinese goods.

Hotter Inflation Data

Core PPI came at 0.3% vs. 0.2% consensus.  Sooner or later, persistence in higher inflation at the producer level will get passed on to the consumer and become a concern for the stock market.

Momo Crowd And Smart Money In Stocks

The momo crowd is aggressively selling stocks.  The smart money is inactive.

Gold

Trading in gold is listless.

Oil

Oil is being sold on trade war concerns.

Be Careful Of The Talking Heads

Prudent investors ought to be especially careful of talking heads regarding the trade war. A vast majority of the talking heads seem to have a simple formula. The formula is to look at the market momentum and after-the-fact justify it. This way they appear to be always right.

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 down and bonds are ticking up as money flows from stocks into bonds.

Gold futures are at $1251, silver futures are at $15.98 and oil futures are $73.34.

S&P 500 resistance levels are 2800, 2840 and 2860; support levels are 2765, 2740 and 2700.

DJIA futures are  down 222  points.

EARNINGS SEASON STARTS, MOMO BUYS STOCKS, GOLD SOLD

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

Earnings Season Starts

Earnings season has started.  PEP is the first big name to report this morning.  The company reported earnings better than the consensus but in line with the whisper numbers.  The strength is not coming from its drinks but from snacks sold by Frito-Lay.

Several large banks are scheduled to report earnings later this week.  Yesterday banks rallied as shorts are panicking and buying to cover  ahead of the earnings.

Momo Crowd And Smart Money In Stocks

The momo crowd aggressively bought stocks yesterday and continues to aggressively buy in the early trade.  The smart money  is inactive.

Trade Wars

The market is beginning to completely ignore trade war issues.   The reason is that the market is being controlled by the momo crowd.  The momo crowd does not do much analysis but simply runs in the direction of the momentum.

Gold

Gold quickly gave up strength yesterday morning as the dollar strengthened again.

Oil

Oil is being bought on production issues in Libya and a strike in the North Sea.

Technical Patterns

Oil service stocks are tracing a Continuation Triangle. This is bullish.  ETFs of interest are OIH and XOP.

Gold miners are tracing a Key Reversal.  This is bearish. ETF of interest is GDX.

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 up and bonds are ticking down.

Gold futures are at $1253, silver futures are at $16.09, and oil futures are $74.38.

S&P 500 resistance levels are 2800, 2840 and 2860; support levels are 2765, 2740 and 2700.

DJIA futures are up 66 points.

WHAT TRADE WAR? MOMO BUYS, THE REAL REASON FOR BUYING AND GOLD SHINES

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

What Trade War?

Please click here for the chart and note the following:

  • Stocks were bought ahead of the new tariffs.
  • Stocks were bought on new tariffs and a good jobs report.
  • This morning round-robin buying is occurring.  Stocks in Asia were up on momentum from U. S. stocks.  Stocks in Europe are up on momentum in Asia.  In early trade stocks are up in the U. S. on momentum in Europe and Asia.

The Real Reason

The real reason behind the buying is that the dollar has weakened.  When the dollar weakens, earnings of multi-national companies go up.  Also it becomes easier for emerging markets to pay back their dollar denominated loans.

Momo Crowd And Smart Money In Stocks

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

China And Japan

Stocks in China climbed 2.5%.  Stocks in Japan climbed 1.2%.

Gold Shines

There is aggressive buying in gold on the weaker dollar.

Oil

Trading in oil is listless as there were no new developments over the weekend.

Technical Patterns

Hong Kong stocks are tracing an Engulfing Line. This is bullish.  ETF of interest is FXI.

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 but can quickly turn negative as the market is approaching a short-term minor resistance shown on the chart linked above.

Interest rates are ticking up and bonds are ticking down.

Gold futures are at $1264, silver futures are at $16.20, and oil futures are $74.00.

S&P 500 resistance levels are 2800, 2840 and 2860; support levels are 2765, 2740 and 2700.

DJIA futures are up 101  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 20% – 30% and short to medium-term hedges of  10% – 15% and very short term hedges of 10%.

 

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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