WEEKLY MARKET DIGEST: TRUMP RUNS STOCKS, OIL CRUSHED, OPPORTUNITY AND GOLD ON FRENCH ELECTION $DIA $GLD $QQQ $SLV $SPY $TBF $TBT $USO $LBD $XOP

 WEEKLY MARKET DIGEST: TRUMP COMMENT RUNS STOCKS, OIL CRUSHED, OPPORTUNITY AND GOLD ON FRENCH ELECTION $DIA $GLD $QQQ $SLV $SPY $TBF $TBT $USO $KRE $LQD $KRE

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.

TRUMP AND MNUCHIN RUN UP THE MARKET, PARIS ATTACK

This is what you need to know today.

Trump And Mnuchin Run Up The Market

In yesterday’s Morning Capsule, our very, very short-term indicator was positive.  Market was set up to go higher.  Comments from Mnuchin and Trump added fuel to the fire.  Mnuchin was very optimistic on tax reform.  Trump is talking about getting healthcare reform done soon.  Republicans are shooting for bringing the health care reform to the House floor on Wednesday.  If Republicans are successful, and there is not an adverse outcome in the French election, market can go higher.

Paris Attack

There is another small scale terrorist attack in Paris.  This attack is likely to help La Pen.  La Pen will not be positive for the markets.

Gold

Gold is getting further support from the Paris attack.  Please see yesterday’s Morning Capsule for more details on gold.

Oil

Oil continues under pressure.  Please see yesterday’s Morning Capsule for more details on oil.

Technical Patterns

Several regional banks are tracing out a Bullish Wedge Pattern.  ETF of interest is KRE.

This is powerful information and many investors use this to enter trades in addition to our official signals.  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.

Bonds, interest rates and currencies are range bound.

Gold futures are at $1284, silver futures are at $17.91, and oil futures are $50.65.

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

DJIA futures are down 4 points.

OPPORTUNITY AHEAD FROM THE FRENCH ELECTION, GOLD MIGHT CRASH OR FLY ON MONDAY BASED ON FRENCH RESULTS, OIL CRUSHED

This is what you need to know today.

Opportunity Ahead From The French Election

We shared with you yesterday,

The first round of French presidential election will take place this Sunday.  The nightmare scenario is that both far right and far left candidates will come out stronger from this round.  The second round vote is scheduled for May 7.

Based on probabilities, our portfolios are correctly positioned at this time.  Probability of an adverse outcome is low.  Depending upon election results, we will make necessary changes.  It is important for investors to pay attention to ‘What To Do Now’ section of the Morning Capsule.

On the flip side there are positive scenarios providing opportunities.  If a centrist candidate wins, European stocks will go up. U. S. stocks will first fall and then rise.

We will do a separate post on actionable European opportunities in ZYX Buy and ZYX Global.  There will also be separate posts in ZYX Short as some actions need to be taken to reduce risk ahead of the French election.  There are also some European stocks in ZYX Buy that need to be reviewed by investors holding them, we will do separate posts.  Some positions in ZYX Global also need to be reviewed before the French election, there will be a separate post.

Gold Might Crash Or Fly On Monday Based On French Results

Right now there is a bid under gold due to potential adverse outcome in French election. If the outcome is truly adverse, gold can fly. On the other hand, in the event of a positive outcome, the underlying bid will disappear and gold has the potential to crash.

Please note that this week in SIGNAL QUALITATIVE: CURRENT GOLD AND SILVER RATINGS, AND ALLOCATION, REVIEWED DAILY AFTER THE ORIGINAL PUBLICATION  the very, very short-term rating was changed to Neutral.  There is no way to call the outcome with certainty.  Please remember that opinions do not matter, it is the hard data that matters.  The hard data shows that probability of an adverse outcome is low but not non-existent.

Oil Crushed

Oil has been crushed on EIA data showing gasoline build of 1.5M barrels vs. consensus of a draw of 1M barrels.

Technical Patterns

Several corporate bonds are tracing a bearish Inside Bar.  ETF of interest is LQD.

This is powerful information and many investors use this to enter trades in addition to our official signals.  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.

Euro is stronger.

Interest rates and bonds are range bound.

Gold futures are at $1279, silver futures are at $18.12, and oil futures are $50.85.

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

DJIA futures are up 29 points.

FRENCH NIGHTMARE SCENARIO FOR INVESTORS MAY START THIS WEEKEND, BEIGE BOOK AHEAD, SMART MONEY AND GOLD WHIPSAWED BY THE RUMOR

This is what you need to know today.

French Nightmare Scenario

The first round of French presidential election will take place this Sunday.  The nightmare scenario is that both far right and far left candidates will come out stronger from this round.  The second round vote is scheduled for May 7.

Based on probabilities, our portfolios are correctly positioned at this time.  Probability of an adverse outcome is low.  Depending upon election results, we will make necessary changes.  It is important for investors to pay attention to ‘What To Do Now’ section of the Morning Capsule.

Beige Book

Fed’s Beige Book will be released this afternoon at 2:00 pm ET.  This has the potential to be a market moving event.

Smart Money And Gold Whipsawed By The Rumor

Yesterday the ‘smart money’ was beginning to sell gold aggressively.  The momo crowd buying was not able to contain selling by the smart money.  Then came the rumor that Trump had a plan to shoot down North Korean missile if tested. Gold rocketed.  The smart money scrambled to buy gold to cover their short positions.  We also took profits on our inverse gold miner ETF position DUST.  We wrote in ZYX Buy,

There is a report of a U. S. plan to shoot down a North Korean missile if tested.  The report is likely not true but since the momo crowd controls gold these days, it is simply prudent to take profits and exit this short-term position.

Please also see Beige Book section above.

Technical Patterns

None of note.

This is powerful information and many investors use this to enter trades in addition to our official signals.  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 after a big move down in interest rates yesterday.

Iron ore is moving up on short covering.

Currencies are range bound.

Investors are selling bonds of weaker European countries ahead of the French election.

Gold futures are at $1287, silver futures are at $18.26, and oil futures are $45.00.

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

DJIA futures are up 36 points.

SMART MONEY SELLS SAFE HAVEN ASSETS, STOCKS REBOUND, U. K. ELECTION, TURKISH LIRA RISES

This is what you need to know today.

Smart Money Sells Safe Haven Assets

The ‘smart money’ is lightly selling safe haven assets of gold, silver, Treasury bonds and yen.  This indicates that the smart money does not anticipate global geopolitical tensions to increase at this time.

Stocks Rebound

Over the weekend, there was a lot of gloom about stocks from technically oriented gurus based on S&P  500 dropping below the 50 day moving average.  Many were issuing sell recommendations.

Fear mongers were spreading fear based on geopolitical conditions. On Sunday evening and early morning yesterday, stock futures were under pressure.  When the market did not sell off, shorts covered putting buying pressure. Then machines took over exaggerating the move.  There was also positive delayed reaction to good  earnings from JPM and C.  As a full disclosure, both JPM and C are in our portfolio.

This morning stocks are finding support on good earnings from BAC.  As a full disclosure BAC is in our portfolio. However, DJIA will be under pressure as GS earnings did not live up to expectations.  DJIA is a price weighted index and GS is a very high priced stock.  For this reason GS can disproportionately move DJIA.

U. K. Election

Prime Minister May is taking advantage of her lead in opinion polls to call for a snap election in the U. K.  The election is likely to give her party a bigger majority and a firmer hand in Brexit negotiations.

Pound has strengthened.

Turkey

Turkish lira has strengthened after the referendum passed narrowly.  After being initially strong, Turkish stocks are retracing recent gains.

China Growing Again

China GDP came at 6.9% vs. 6.8% consensus.  This was the fastest growth since 2015.

Iron Ore Crushed

In spite of better than expected economic data from China, iron ore has been crushed hitting a five month low.  As a full disclosure, we have a short position in an iron ore producer.

Weaker Housing Starts

Housing starts came at 1215K vs. 1256K consensus.  However building permits came at 1260K vs. 1240K consensus.  Building permits are a leading indicator.

Technical Patterns

Nasdaq 100 is showing a Bearish Triple Moving Average Crossover. ETF of interest is QQQ.

Many oil exploration production stocks have retraced a Hammer.  This is bullish.  ETF of interest is XOP.

Please note that although traditional technical signals are very popular, they no longer work well.  They used to work much better in the 1980’s.  Now they are obsolete but it is worth paying attention to them because a large number of investors act on them.  If they are exclusively followed, you will lose money over a large number of trades over a long period of time. 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.

Oil traders are waiting for API data.

Gold futures are at $1287, silver futures are at $18.40, and oil futures are $52.30.

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

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 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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