WEEKLY MARKET DIGEST: TRUMP CAUSES NERVOUSNESS IN STOCKS BUT GOLD BENEFITS, BIG BET ON OIL $DIA $GLD $QQQ $SLV $SPY $TBF $TBT $USO

 WEEKLY MARKET DIGEST: TRUMP CAUSES NERVOUSNESS IN STOCKS BUT GOLD BENEFITS, BIG BET ON OIL $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.

GOLD RISES AND STOCKS FALL ON NERVOUSNESS AHEAD OF A MAJOR SPEECH BY TRUMP

This is what you need to know today.

Trump Speech

At 10:20 am ET, Trump will address the annual Conservative Political Action Conference (CPAC).

Nervousness

There is significant nervousness in the markets ahead of Trump’s speech.  Stocks are likely to fall at the open and gold is being aggressively bought ahead of the speech.  All of this can easily flip based on what Trump says in his speech.

Economic Data

There is no point in discussing any economic data or other news because everything is being completely overshadowed by Trump’s speech.

Markets

Our very, very short-term early stock market indicator is negative.

Bonds are running up on nervousness and interest rates are falling.

There is range bound high volatility in oil and currencies.

Gold futures are at $1259, silver futures are at $18.40, and oil futures are $53.88.

S&P 500 resistance levels are 2363, 2400 and 2450; support levels are 2334, 2300, and 2288.

DJIA futures are down 95 points.

MNUCHIN RUNS GOLD AND OIL BUT STOCKS INTERPRET HIS COMMENTS DIFFERENTLY

This is what you need to know today.

Mnuchin Comments

Treasury Secretary Mnuchin failed to bolster the case for quick stimulus and also the case for strong dollar.  The dollar has weakened, especially against yen.

Dovish Fed

The Fed was more dovish than the consensus.  Probability of a rate increase in March has now fallen from 43% to 36%.

Mnuchin Runs Gold

Mnuchin’s comments are running gold up.  Gold bulls see dollar weakening and stock market falling.  One of the reasons for the stock market going up has been the prospects of quick  fiscal stimulus.  Gold bull’s reasoning is that without quick stimulus stocks will fall and money will move into gold.  Now gold has moved into a heavy resistance zone.

Please see gold ratings updated this morning.

Stocks Interpret Mnuchin Differently

Stocks are simply overlooking Mnuchin’s comments and interpreting them differently than gold.  The result is that there is no down draft in stocks.

Oil

Oil was already in a bullish mode when Mnuchin’s comments came.  Weaker dollar caused oil to rally further. Previously oil was rising on API reporting crude inventories falling by 884K barrels vs. consensus of increase of 3.5 million barrels.  EIA data will be released at 11:00 am ET.  If this data is bullish, oil could go much higher.

Markets

Our very, very short-term early stock market indicator is positive.

Bonds are ticking up and interest rates are ticking down.

Gold futures are at $1248, silver futures are at $18.15, and oil futures are $54.80.

S&P 500 resistance levels are 2400, 2450 and 2500; support levels are 2334, 2300, and 2288.

DJIA futures are up 57 points.

FED MINUTES AHEAD, IMMIGRATION CRACKDOWN, GOLD WHIPSAWED

This is what you need to know today.

Fed Minutes

The Fed will publish the minutes of its last meeting at 2:00 pm ET.  We will be carefully reading the tea leaves for the next rate increase.

Before the release of Fed minutes, there is a 43% probability of a rate increase in March.

Immigration Crackdown

Trump has outlined an unprecedented crackdown on illegal aliens.  The government plans to hire 15,000 more agents to deport more people.

Insight here is that this will put more pressure on an already tight labor market and push wages higher.  The move is inflationary and will have major impact on investments.  We will make necessary changes if this initiative survives court challenges.

Gold

Gold is getting whipsawed causing heavy losses among purely technical traders.

The next major event for gold is the release of Fed minutes this afternoon.

Euro

Earlier today euro broke support at $1.05  but has since rebounded.  There is again talk of parity in Europe.

Markets

Our very, very short-term early stock market indicator is negative.

Oil has broken support at $54 after aggressive buying yesterday.

Bonds are moving up strongly as interest rates move down.

Gold futures are at $1237, silver futures are at $17.93, and oil futures are $53.57.

S&P 500 resistance levels are 2363, 2400 and 2450; support levels are 2334, 2300, and 2288.

DJIA futures are down 15 points.

STOCKS CHEER GOOD EARNINGS AND GOOD DATA FROM EUROPE, FOR THE FIRST TIME EVER ONE BILLION BARRELS SPECULATIVE LONGS, GOLD SOLD

This is what you need to know today.

Stocks Cheer

There is a lot of optimism about stocks in trading circles this morning.  The ‘smart money’ is showing light pessimism.  We will be carefully watching to see how long traders’ optimism lasts.  This optimism can fizzle quickly.

Good Earnings

Two popular companies WMT and HD reported earnings this morning better than consensus and more importantly better than the whisper numbers.  Traders are excited.

Data From Europe

Composite Purchasing Managers Index (PMI) in Europe came at 56.0 compared to 55.0 consensus.  PMIs for two major economies, Germany and France came above 56.

First Time Ever One Billion Barrels Long

For the first time ever, speculators have built a position of over one billion barrels long in oil.  Momo crowd is cheering the data by aggressively buying oil.

Natural Gas

Natural gas is being beaten mercilessly on warm weather.  If the beating continues at this pace, we will consider stepping in to take the other side by scaling in lightly to start building a position ahead of summer air-conditioning demand.

Gold

Overnight the smart money lightly sold gold. Momo crowd is still buying gold but not able to contain selling by the smart money.  Selling by the smart money stopped when gold fell under $1230.

Trading action indicates that the smart money does not have conviction in its selling but is simply selling for the very short-term.

Stronger dollar and buying in stocks is working against gold this morning.

Markets

Our very, very short-term early stock market indicator is positive.  Please be aware that the market is very over bought and vulnerable.

Interest rates are ticking up and bonds are ticking down.

Euro is especially weak against the dollar.

Copper is encouraged by a dispute between Indonesian government and FCX regarding the second largest copper mine.

Gold futures are at $1229, silver futures are at $17.85, and oil futures are $54.95.

S&P 500 resistance levels are 2363, 2400 and 2450; support levels are 2334, 2300, and 2288.

DJIA futures are up 71  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 27 – 38% of assets in cash or treasury bills, and short to medium-term hedges of  25% and very short term hedges of 5%.

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