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.
GDP BELOW FORECAST, TRUMP TRYS TO CLEAN UP AFTER MNUCHIN
To gain an edge, this is what you need to know today.
GDP Below Forecast
The goal of the Trump administration is to increase growth to 4%. The latest GDP reading came at 2.6% vs. 2.9% consensus.
Trump Cleans Up After Mnuchin
Trump has tried to clean up after Mnuchin’s unprecedented comment to drive the dollar lower. The dollar recovered some after Trump’s clean up but is falling again because of weak GDP.
Stocks
Yesterday near the highs, smart money was selling while momo was buying. Subsequently the market gave up a big part of its gains as the dollar strengthened. This morning the dollar is weakening again. The momo is still buying aggressively. The smart money is inactive.
Gold
Gold gave up its gains when the dollar strengthened. Interestingly as of this writing as the dollar has weakened after GDP, rallies in gold are failing.
Oil And Natural Gas
The short squeeze in natural gas continues.
Oil is trading based on dollar movements.
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 momo to try to move it higher first.
Gold futures are at $1350, silver futures are at $17.37, and oil futures are $65.56.
S&P 500 resistance level is 2860; support levels are 2840, 2800, and 2756.
DJIA futures are up 48 points.
DOLLAR DECLINE IS ALL THAT MATTERS
To gain an edge, this is what you need to know today.
The dollar decline is all that matters. In the short-term, investors in stocks, gold, oil and emerging markets are celebrating it. In the long-term, it is endangering investors’ wealth. We will do a separate post.
Aggressive Buying
In early trading, the momo crowd is aggressively buying stocks, oil, natural gas and gold.
Euro
Euro is soaring as ECB President Draghi refused to comment on the weaker dollar.
Dangerous Level
The yield on 10-year Treasuries has risen to 2.66%. A break of 2.7% has potential to accelerate towards 3%. If this happens, it will be dangerous for the stock market rally. We will be keeping a close watch for you.
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 from the high of the pre-market trading of up 139 points.
Gold futures are at $1358, silver futures are at $17.56, and oil futures are $66.27.
S&P 500 resistance level is 2860; support levels are 2840, 2800, and 2765.
DJIA futures are up 87 points.
UNPRECEDENTED MNUCHIN MOVE SENDING STOCKS, GOLD AND OIL HIGHER BUT DOLLAR LOWER
To gain an edge, this is what you need to know today.
Munchin Move
In an unprecedented move, Treasury Secretary Mnuchin said that weak dollar is good for the U. S.
Dollar
The dollar stumbles to the lowest point in three years.
Stocks
Weaker dollar will increase earnings. This is driving stocks higher.
The momo crowd is buying aggressively and smart money is buying lightly.
Gold
Gold is priced in dollars and for this reason moves inverse to the dollar. As of this writing, gold is breaking out of the $1350 resistance.
The momo crowd is buying aggressively and smart money is buying lightly.
The allocation to gold is going higher. Please see separate post.
Oil And Natural Gas
Oil is also priced in dollars and thus moves inverse to the dollar. Momo crowd is aggressively buying oil but smart money is inactive.
Natural gas short squeeze has taken another leg up.
Bitcoin
Bitcoin is seeing mild buying.
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 positive.
Interest rates are ticking up and bonds are ticking down.
Gold futures are at $1352, silver futures are at $17.32, and oil futures are $64.73.
S&P 500 resistance level is 2860; support levels are 2840, 2800, and 2765.
DJIA futures are up 106 points.
ANOTHER SHORT SQUEEZE IN STOCKS AND NATURAL GAS, EARNINGS IN LINE WITH WHISPER NUMBERS, BONDS AND GOLD SUPPORTED BASED ON BOJ
To gain an edge, this is what you need to know today.
Stocks
About half of yesterday’s rally in stocks was short squeeze. The momo crowd bought aggressively when the news came out that there was a deal in the Senate to keep the government running. Smart money sold into the resulting strength. Short sellers also built positions on the resulting strength. Short sellers already had positions expecting a more prolonged shutdown. When the market did not drop, short sellers scrambled to buy-to-cover. This resulted in an explosive rally in the afternoon.
The momo crowd, not known for its analysis and oblivious to the risk, continues to buy aggressively in the early trade.
The smart money continues to lightly sell.
Oil And Natural Gas
Natural gas has taken another leg up in the near term contract on another short squeeze that is in progress as of this writing. The momo crowd is aggressively buying but smart money is selling into the strength.
Mini short squeeze is also occurring in oil.
Earnings In Line With Whisper Numbers
Media reporting of earnings is an illusion in reality. Earnings are coming in better than the consensus numbers. However it is the whisper numbers that really count. Collectively earnings so far are in line (not better) than the whisper numbers.
Bank Of Japan
Bank of Japan has signaled that easy money is not over yet. This is supporting bonds and gold.
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.
Gold futures are at $1332, silver futures are at $16.79, and oil futures are $64.07.
S&P 500 resistance level is 2840; support levels are 2800, 2765, and 2740.
DJIA futures are down 4 points.
DOLLAR LOWER ON SHUTDOWN BUT STOCKS NOT TOO CONCERNED
To gain an edge, this is what you need to know today.
Shutdown
The government shutdown is in progress. The dollar is lower on the shutdown but stocks do not seem to be concerned. The reason is that the government shutdown has a limited impact on earnings. Also historical data shows that government shutdowns typically do not lead to sharp selloffs.
Caution On Stock Optimism
Before counting on the past data on the impact of the shutdown on the stock market, it is important to remember that this time there is a difference. The stock market has gone up in a straight line without a correction. The market cannot simply continue to rise at its present rate. If the shutdown is brief, there may not be an issue. However, if the shutdown prolongs, it may potentially provide an excuse for the market to correct. Such a correction will likely be a buying opportunity.
Gold
Gold is not responding to dollar edging lower and the shutdown. Certain influential media is also giving publicity to gold potentially breaking out. However the lack of response from gold, if it continues, cannot be considered bullish.
Oil And Natural Gas
OPEC and Russia have reaffirmed production cuts to the year end. Oil should have reacted bullishly but it is not reacting. If this persists, this cannot be considered bullish.
Natural gas is showing signs of short squeeze abating.
Germany
There is optimism that Merkel will be able to form a new government.
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 can swing positive based on the shutdown news.
Gold futures are at $1333, silver futures are at $17.08, and oil futures are $63.36.
S&P 500 resistance level is 2840; support levels are 2800, 2765, and 2740.
DJIA futures are down 67 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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