WEEKLY MARKET DIGEST: TRADER TALK ABOUT NEW TRUMP TRAFIFFS, BIG HOPE FOR GOLD $DIA $GLD $QQQ $SLV $SPY $TBT $USO

WEEKLY MARKET DIGEST: TRADER TALK ABOUT NEW TRUMP TRAFIFFS, BIG HOPE FOR GOLD $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.

TRADER TALK ON NEW TRUMP TARIFFS, EMPLOYMENT REPORT

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

Trader Talk On New Tariffs

In a surprise move, Trump yesterday imposed 10% tariffs on additional $300 billion worth of Chinese goods.  There is an interesting trader talk going on as follows:

  • Trump wants Powell to lower interest rates.
  • Powell gave tariffs as one of the reasons to lower interest rates.
  • The timing of Trump imposing new tariffs right after Powell press conference is designed to force Powell to lower interest rates further.

We have no direct knowledge if this is true.  However it is important for you to know this information because this logic is turning traders bullish.  The thinking is that any harm done by tariffs will be more than compensated by new interest rate cuts.

Employment Report

Non-farm Private Payrolls came at 148K vs. 165K consensus.   The rest of the report was roughly in line.

Momo Crowd And Smart Money In Stocks

The momo crowd is acting like a yo-yo in the early trade after selling yesterday.  Smart money is inactive.

Gold

Gold rocketed yesterday after Trump tweet and as interest rates fell.  Gold loves low interest rates.

The momo crowd is aggressively buying gold.  Smart money is inactive.

The momo crowd buying is especially strong in silver.  Smart money is inactive in silver.

Oil

Oil was sold aggressively after Trump tweet.  The momo crowd aggressively sold first and then when momentum reversed late in the day the momo crowd aggressively bought.  This morning the momo crowd is buying oil again.  Smart money is inactive.

Marijuana

APHA reported good headline earnings but looking below the surface, the headline is misleading.  We earlier pointed this out in ZYX Buy.

CRON is buying American hemp CBD assets by acquiring subsidiaries of Redwood Holding Group.  The momo crowd is buying marijuana stocks in the early trade.  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 expect the market to be volatile in either direction.  This indicator, with a great track record, is popular among long term investors to stay in tune with the market and among short term traders to independently undertake quick trades.

After a big rise in bonds and a big fall in interest rates yesterday, this morning interest rates and bonds are range bound.

After significant volatility yesterday after Trump tweet, currencies are range bound this morning.

Gold futures are at $1447, silver futures are at $16.10, and oil futures are $56.22.

S&P 500 resistance levels are 2950, 3020 and 3050; support levels are 2925, 2918 and 2860.

DJIA futures are down 41 points.

WHAT NOW FOR STOCK INVESTORS? FED PUTS LESS AIR IN THE BUBBLE THAN EXPECTED

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

Fed Closer To Neutral

The stock market investors are addicted to easy money and just like an addict they want more easy money. The bubble in many asset prices, not just the stock market, is getting bigger across the globe. The Federal Reserve pumped more air into the bubble with a rate cut but not as much air as bulls wanted. The bulls do not like that they did not get what they wanted. Prudent investors are asking, “What now?” Let’s examine with the help of a chart.

Please click here for an annotated chart of U. S. Dollar Index ETF (UUP). Please note the following:

  • The dollar index goes up when the U. S. dollar moves higher against a basket of currencies.
  • In theory, the dollar should go down on a rate cut and go up on a rate hike. The reason is that money moves out of a currency where the interest rate is cut.
  • The chart shows that instead of going down, the dollar moved up on the rate cut.
  • The chart shows the dollar previously broke out to the upside instead of breaking down as the Fed decision approached.
  • The chart shows a strong up move in the dollar as the rate cut fever picked up steam.
  • The dollar has moved up in the face of Trump calling for a weaker dollar. There were even reports that Trump administration was discussing intervention to lower the dollar.
  • On the rate cut, instead of moving up as bulls had been forecasting, the three popular broad based ETFs, S&P 500 ETF (SPY), Nasdaq 100 ETF (QQQ) and small-cap ETF (IWM) moved down.
  • Gold ETF (GLD), silver ETF (SLV) and gold miner ETF (GDX) fell. Precious metal investors were positioned for a strong move up.
  • The selling did not spare popular stocks such as Amazon (AMZN), Facebook (FB), Microsoft (MSFT) and Apple (AAPL).
  • The strength in the dollar in the face of a rate cut is a testament to the strength of the U. S. economy.
  • I have been advocating that no rate cut was needed and it appears that the Fed stumbled to the political pressure, especially from President Trump. The up move in the dollar on the rate cut shows that the rate cut was not really needed.
  • Before the rate cut announcement, in the Morning Capsule that is provided to The Arora Report subscribers, we wrote, “On the other hand if the Fed takes a neutral stance going forward, that will be worse than the expectations and the start of a major sell off.” The market sold off after the rate cut because Powell was closer to neutral than the stock bulls wanted.

What Now For Stock Investors

Even though Powell was closer to neutral than stock bulls wanted, Powell is still talking about more rate cuts. This should, in theory, dampen any major potential sell off. It is not that Powell threw cold water on the bulls’ expectations of a prolonged series of rate cuts in the future even if the data did not support such rate cuts.

As I have previously written, the U. S. stock market is like a drunken party where all the drunken people claim nobody is drunk and the punch is still being spiked.

Investors ought to monitor the situation closely in case more risks develop that can lead to a 2008 like selloff in which many investors lost one-half the value of their portfolios. In 2008, when the stock market was falling, the ZYX Asset Allocation Model with 10 inputs (please click here to see the 10 inputs) produced a large gain by using inverse ETFs, hedges and other protective measures. The model gave an aggressive buy signal in 2009 and has stayed bullish since then. But at times like now, we have had defensive measures such as proper allocations to cash and hedges as well as proper portfolio construction to control risks.

It is well documented that I was calling for Dow Jones Industrial Average (DJIA) to hit 30,000 when the index was at 16,000 at a time when nobody was making such a bullish call. Since then I have repeated that call several times. The message is to stay for a while, enjoy the party but know when to leave and in the meantime take proper risk control measures.

Please scroll down to see What To Do Now section.

Momo Crowd And Smart Money In Stocks

The momo crowd is buying stocks in the early trade after aggressively selling yesterday afternoon.  Smart money is inactive.

Gold

Gold is being hit hard as the dollar strengthens.  The momo crowd is aggressively selling gold. Smart money is inactive.

Oil

The momo crowd is aggressively selling oil.  Smart money is inactive.

Marijuana

The momo crowd is lightly selling 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 higher.  This indicator, with a great track record, is popular among long term investors to stay in tune with the market and among short term traders to independently undertake quick trades.

Interest rates are ticking down and bonds are ticking up.

The dollar is stronger.

Gold futures are at $1413, silver futures are at $16.00, and oil futures are $57.20.

S&P 500 resistance levels are 3020, 3050 and 3100; support levels are 2950, 2925 and 2918.

DJIA futures are down 10 points.

THE FED DAY, CHINA TALKS GO NOWHERE, BULLISH DATA FOR OIL AND BIG HOPES FOR GOLD

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

The Fed Day

The much anticipated Fed day has arrived.  The Fed decision will be announced at 2:00 pm followed by a press conference at 2:30.  Consider being alert during this time in case there are significant opportunities.

Consensus remains that the Fed will cut interest rates by 0.25%. Bulls’ hope of 0.50% cut have faded due to strong economic data.  However bulls are hoping for two more rate cuts this year.  If the Fed concurs, expect the market to go up.  On the other hand if the Fed takes a neutral stance going forward, that will be worse than the expectations and the start of a major sell off.

No Progress In China

It appears that trade talks in China made no progress and trade talks will continue in September.  Interestingly the U. S. market is so focused on the Fed that it is ignoring the news on trade.  However stocks in Tokyo, Hong Kong, Shanghai and Seoul fell on the news.

ADP Employment Change

ADP is the largest private payroll processor in the country.  It uses its data to give a glimpse of the employment picture ahead of the official employment report that will be released on Friday.  ADP employment change came at 156K vs. 150K consensus.

Momo Crowd And Smart Money In Stocks

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

Gold

After yesterday’s rally, there is no material momo crowd or smart money activity in gold in the early trade.  The future direction in gold will come down to the Fed statement.

If the Fed is extra dovish, expect gold to quickly move over $1500. On the other hand if the Fed is neutral, gold can potentially quickly fall over $100.

Oil

API data showed inventory draw of 6.024 million barrels vs. consensus of 1.8 million barrel draw.  Oil is running up on this bullish data.

The momo crowd is aggressively buying oil. Smart money is  inactive.

Marijuana

The momo crowd is lightly 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 neutral and can swing either way based on the Fed. Expect the market to open higher due to Apple (AAPL) earnings. This indicator, with a great track record, is popular among long term investors to stay in tune with the market and among short term traders to independently undertake quick trades.

Interest rate are ticking down and bonds are ticking up.

Currencies are range bound.

Gold futures are at $1442, silver futures are at $16.47, and oil futures are $58.61.

S&P 500 resistance levels are 3020, 3050 and 3100; support levels are 2950, 2925 and 2918.

DJIA futures are up 56 points.

DID TRUMP JUST NIX THE BUDDING STOCK RALLY?

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

Trump Comments

The technical setup has been just right for a rally before the Fed decision as has been historically the case most of the time.  However President Trump has just said that China is ripping off the U. S. and is unwilling to buy our agricultural products.  This is coming at a time when the American team is in China for negotiations.  Did Trump just nix the budding stock rally?

As of this writing, significant selling pressure is coming in due to Trump comments.  However as the day progresses, the natural tendency of the market to rise before the Fed decision may take over.

Momo Crowd And Smart Money In Stocks

The momo crowd is aggressively selling in the early trade.  Smart money is inactive.

Gold

Gold is rising as is usually the case before the Fed meeting in hopes of a Fed rate cut.  The momo crowd is aggressively buying gold. Smart money is inactive.

Oil

The momo crowd is buying oil in the early trade.  Smart money is inactive.

Marijuana

The momo crowd is selling marijuana stocks in the early trade.  Smart money is inactive.

Technical Patterns

Gold miners are tracing an outside bar.  This is bullish.  ETFs of interest are GDX, GDXJ and NUGT.  However the risk is very high in gold because of the uncertainty of the Fed decision.

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 has a high probability of turning positive.  This indicator, with a great track record, is popular among long term investors to stay in tune with the market and among short term traders to independently undertake quick trades.

Interest rates are ticking down and bonds are ticking up.

Currencies are range bound.

Gold futures are at $1439, silver futures are at $16.49, and oil futures are $57.15.

S&P 500 resistance levels are 3020,  3050 and 3100; support levels are 2950, 2925 and 2918.

DJIA futures are down 107 points.

STOCKS AND GOLD HISTORICALLY RUN INTO THE FED MEETING, MARIJUANA OVERSOLD

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

Run Into The Fed Meeting

Stocks and gold historically run up during the 24 hours preceding a Fed announcement.

The Fed will announce its policy decision at 2:00 pm ET on Wednesday.

Consensus

The consensus is that the Fed will cut rates by 25 basis points and the statement will be very dovish possibly indicating another rate cut next month.

Bulls’ hopes of a 50 point basis cut are fading but some bulls are still sticking to it.

One of the secrets to The Arora Report’s success has been scenario analysis ahead of time.  One of the scenarios that not many are talking about is that the Fed statement turns out to be neutral.  The way the market is positioned, it will take a neutral statement as negative.  As a result, both stocks and gold can go down.

Momo Crowd And Smart Money In Stocks

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

Gold

The momo crowd is buying in the early trade.  Smart money is inactive.

Oil

There is no material smart money or momo crowd activity in oil in the early trade.

Marijuana

There is no material smart money or momo crowd activity in marijuana stocks in the early trade.

Marijuana stocks are oversold from a technical perspective.  Bounces are common from the oversold condition.  However, looking at the longer term pattern, the bounces are likely to fail unless there is positive news.  For this reason, at this time, the risk reward is not favorable in initiating new marijuana positions here for the long term.  Of course, there may be short term trading opportunities.  If good setups develop, there will be separate signals.

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 has a high potential to turn positive later in the day.  This indicator, with a great track record, is popular among long term investors to stay in tune with the market and among short term traders to independently undertake quick trades.

Interest rates are ticking down and bonds are ticking up.

The dollar is slightly  stronger.

Gold futures are at $1420, silver futures are at $16.43, and oil futures are $56.29.

S&P 500 resistance levels are 3050 and 3100; support levels are 3020, 2950 and 2925.

DJIA futures are up 14 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  5% – 15% and short term hedges of 5% – 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.

Please click here to take advantage of a FREE  30 day trial.

Check out our enviable performance in both bull and bear markets.

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