WEEKLY MARKET DIGEST: TRUMP BRINGS PRESENTS, NEW DATA UPSETS THE MARKET APPLE CART AND CURRENCIES IN THE CATBIRD SEAT $DIA $GLD $QQQ $SLV $SPY $TBF $TBT $USO

WEEKLY MARKET DIGEST: TRUMP PORTFOLIO, CURRENCY IN CATBIRD SEAT AND APPLE CART UPSET $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. 

MAJOR SLOW DOWN IN EMPLOYMENT UPSETS THE APPLE CART

This is what you need to know today.

Apple Cart Upset

The employment data released by the U. S. Department of Labor this morning upsets the apple cart.  This is the weakest data in seven months.  We will be digging deeper into it to see if there are anomalies.  Internals of the data look good even though the headline number is weak.

Non-Farm Private Payrolls came at 171K vs. 151K consensus.

Hourly wages rose 0.3% vs. 0.3% consensus.

Average Work Week came at 34.5 hours vs. 34.5 consensus.

Markets

As of this writing, markets are reacting to the weak data in a predictable rational manner.

Interest rates are slightly lower.

Bonds are trying to stage a rally but are meeting heavy resistance.

Momo crowd is aggressively buying gold, silver and copper; at the same time Smart Money is lightly selling into the strength. Based on traditional technical analysis, pure technical traders are likely to jump on gold and silver on the long side.  It will not be a surprise if gold breaks out on combined buying by the momo crowd and technical traders.

Yesterday in ZYX Short Sell Change Alert, we added to short oil position when oil ran up to over $46 on Canadian fire.  We wrote,

We know with certainty that forest fires always die.

On the news of the fires, momo crowd aggressively bought oil only to be slammed hard by Smart Money.  Oil has now pulled back to a handle of $43.

Euro spiked up on weak data but has given up most of its gains.

Yen also spiked up and is holding its gains.

Our very, very short-term early stock market indicator is negative but can quickly turn positive.

Gold futures are at $1293, silver futures are at $17.48, and oil futures are $43.96.

S&P 500 resistance levels are 2063, 2100, and 2111; support levels are 2017, 2000, and 1962.

DJIA futures are down 86 points.

What To Do Now?

It is important for investors to look ahead and not in the rear view mirror.

Consider continuing to hold existing positions. Based on individual risk preference, consider holding cash or treasury bills 30 – 42%, and short to medium-term hedges of  30%.

It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.  When adjusting hedge levels, consider adjusting partial stop quantities for stock positions (non ETF); consider using wider stops on remaining quantities and also allowing more room for high beta stocks.  High beta stocks are the ones that move more than the market.

A Reminder 

As our long time subscribers know well, that during the 2008 and early 2009 market crash, when stock market lost about 50%, subscribers to The Arora Report made money by the boat load.  For long only investors, this remarkable performance was achieved by using inverse ETFs.

Our models do not expect a repeat of 2008.  In the most likely worst case, there may be a garden variety bear market that typically occurred every 18 to 24 months prior to the recent six-year market run.

Individual Trades

Please click on Home on the left side of the Menu.  Scroll down on the Home Page for individual trades.

Click on the Search by Symbol/Tag on the right hand side and click on the symbols of interest.

MAJOR IMPLICATIONS OF TRUMP PUBLICIZING THAT HE LOVES DEBT, CANADIAN FIRE LIGHTS MATCH UNDER OIL

This is what you need to know today.

Major Implications Of Trump Announcement

One of the major planks of Trump has been is that the U. S. is drowning in $19 trillion of debt.

Since yesterday, Trump is out pronouncing how he likes debt and a weaker U. S. dollar. There are a lot of nuances to his statements and these nuances are sensible.  However, the media does not care about nuances and most people are not going to understand these nuances anyways.

Trump is expert at getting media attention.  For this reason investors need to start considering what he is saying.

When discussing politics, the sole interest of The Arora Report is to help investors make money while remaining agnostic to Trump or Clinton/Sanders.

Gold

Trump statement is pushing gold higher.  If he becomes president and the policy is higher debt and lower dollar, gold will go higher.

Canadian Fires

Canadian fires in Alberta are likely to take 0.5 million barrels of production off line.  The affected producers include, RDS.A, SU, and CLC.

Turkey

Turkey’s Prime Minister, Davutoglu, is expected to resign because of a conflict with President Erdogan.  There are three reasons why we are highlighting this.

  • This may negatively affect European Union’s plan to contain migrants in Turkey.  If the plan is not implemented, Europe may engulf into a migrant crisis with significant implications for investors.
  • This points to increasingly authoritarian rule by Erdogan.
  • Davutoglu is one of the few long-term moderate level headed presence at the highest levels in Turkish politics.  It appears that moderates are being pushed out.

The Borsa Istanbul 100 Index, that represents Turkish stocks, fell 3.3%, the most in five months.

Yield on 10-year Turkish bonds climbed and Turkish lira fell.

Markets

Statements by Trump are giving a lift to the yen.

Interest rates and bonds are range bound.

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

Gold futures are at $1286, silver futures are at $17.62, and oil futures are $45.59.

S&P 500 resistance levels are 2063, 2100, and 2111; support levels are 2038,  2017, and 2000.

DJIA futures are up 28 points.

What To Do Now?

It is important for investors to look ahead and not in the rear view mirror.

Consider continuing to hold existing positions. Based on individual risk preference, consider holding cash or treasury bills 30 – 42%, and short to medium-term hedges of  30%.

It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.  When adjusting hedge levels, consider adjusting partial stop quantities for stock positions (non ETF); consider using wider stops on remaining quantities and also allowing more room for high beta stocks.  High beta stocks are the ones that move more than the market.

A Reminder 

As our long time subscribers know well, that during the 2008 and early 2009 market crash, when stock market lost about 50%, subscribers to The Arora Report made money by the boat load.  For long only investors, this remarkable performance was achieved by using inverse ETFs.

Our models do not expect a repeat of 2008.  In the most likely worst case, there may be a garden variety bear market that typically occurred every 18 to 24 months prior to the recent six-year market run.

Individual Trades

Please click on Home on the left side of the Menu.  Scroll down on the Home Page for individual trades.

Click on the Search by Symbol/Tag on the right hand side and click on the symbols of interest.

DISMAL ADP STOPS RISING DOLLAR AND FALLING GOLD IN ITS TRACKS, TRUMP PORTFOLIO

This is what you need to know today.

Employment

ADP Employment came at 156K vs. 193K consensus.  ADP is the largest payroll processor for other private companies in the United States.  ADP is well positioned to compile this data.  The data is an outlier as other data has been showing strong employment.

Gold

Gold had fallen to $1277 breaking support at $1280 earlier this morning.  Based on trading data from across the globe, gold was on its way to a big fall if ADP data had come out strong.  Gold started running as soon as dismal ADP data was reported.

Dollar

Over the last few days, dollar weakness had been over done.  Overnight dollar started strengthening.  The budding rally in dollar was killed by ADP.

Main Events Ahead

The two main events are still ahead.

ISM Non-manufacturing data will be reported at 10:00 am ET.  Consensus is 54.7.  This data will be a major mover of all markets.

The mother of all economic data, Employment Report by U. S. Department of Labor will be reported on Friday at 8:30 am ET.  This report is always a major market mover.

Trump Portfolio

In the U. S. presidential elections, Trump scored a decisive win against Cruz in Indiana. Cruz dropped out.  Now Trump is the presumptive Republican nominee.

Here is a potential Trump portfolio:

  • Long defense, infrastructure, banks, and insurance stocks.
  • Short pharmaceuticals, Mexico, China, Japan, and India.

Our objective is to get your portfolio correctly positioned between now and November for the new president.

Markets

Interest rates are falling leading bonds higher in the wake of ADP data.

Oil is attempting a feeble rally.

Copper and other commodities are falling.

Our very, very short-term early stock market indicator is negative but can quickly turn to positive.

Gold futures are at $1288, silver futures are at $17.45, and oil futures are $44.39.

S&P 500 resistance levels are 2063, 2100, and 2111; support levels are 2038,  2017, and 2000.

DJIA futures are down 94 points.

What To Do Now?

It is important for investors to look ahead and not in the rear view mirror.

Consider continuing to hold existing positions. Based on individual risk preference, consider holding cash or treasury bills 30 – 42%, and short to medium-term hedges of  30%.

It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.  When adjusting hedge levels, consider adjusting partial stop quantities for stock positions (non ETF); consider using wider stops on remaining quantities and also allowing more room for high beta stocks.  High beta stocks are the ones that move more than the market.

A Reminder 

As our long time subscribers know well, that during the 2008 and early 2009 market crash, when stock market lost about 50%, subscribers to The Arora Report made money by the boat load.  For long only investors, this remarkable performance was achieved by using inverse ETFs.

Our models do not expect a repeat of 2008.  In the most likely worst case, there may be a garden variety bear market that typically occurred every 18 to 24 months prior to the recent six-year market run.

Individual Trades

Please click on Home on the left side of the Menu.  Scroll down on the Home Page for individual trades.

Click on the Search by Symbol/Tag on the right hand side and click on the symbols of interest.

CHINA DATA MAY KILL BUDDING RALLY, AUSTRALIA SUCCUMBS, AND CURRENCIES IN THE CATBIRD SEAT

This is what you need to know today.

Budding Rally

Yesterday was the start of a budding rally.  Weak data from China is likely to kill it.

Caixin PMI, which measures activity of small and private industrial companies in China fell to 49.4 vs. 49.9 consensus.

Australia Succumbs

Australia succumbed to lower interest rates.  RBA cut benchmark interest rate to 1.75% in a surprise move.  RBA cited lower inflation.

Currencies In The Catbird Seat

Currencies are in the catbird seat and driving all other markets.  Euro and yen are stronger.

For those analytically minded, there have been several three standard deviation moves.  Such moves are historically rare.

Markets

Interest rates are drifting down and bonds are rising.

Gold and silver are range bound.

Oil is falling on supply concerns.

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

Gold futures are at $1297, silver futures are at $17.59, and oil futures are $44.04.

S&P 500 resistance levels are 2100, 2111 and 2132; support levels are 2038, 2017, and 2000.

DJIA futures are down 115  points.

What To Do Now?

It is important for investors to look ahead and not in the rear view mirror.

Consider continuing to hold existing positions. Based on individual risk preference, consider holding cash or treasury bills 30 – 42%, and short to medium-term hedges of  30%.

It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.  When adjusting hedge levels, consider adjusting partial stop quantities for stock positions (non ETF); consider using wider stops on remaining quantities and also allowing more room for high beta stocks.  High beta stocks are the ones that move more than the market.

A Reminder 

As our long time subscribers know well, that during the 2008 and early 2009 market crash, when stock market lost about 50%, subscribers to The Arora Report made money by the boat load.  For long only investors, this remarkable performance was achieved by using inverse ETFs.

Our models do not expect a repeat of 2008.  In the most likely worst case, there may be a garden variety bear market that typically occurred every 18 to 24 months prior to the recent six-year market run.

Individual Trades

Please click on Home on the left side of the Menu.  Scroll down on the Home Page for individual trades.

PUERTO RICO DEFAULT, $1300 GOLD, AND ITALIAN BANK TROUBLE

This is what you need to know today.

Puerto Rico

Puerto Rico is set to default on a $422 million bond payment.  This is mostly discounted in the market.  These bonds were trading at $0.32 on the dollar prior to the default.

Gold

Gold broke resistance at $1300 before retracing; next resistance zones are $1306 – $1311 and then $1330 to $1337.

Smart Money is lightly selling into the strength.  Momo crowd is aggressively buying.

Italian Bank

Investors showed very little interest in stock offering by Banco Popolare.  The bank rescue fund, recently established by the government ended up buying most of the shares.

Markets

Oil, bonds and interest rates are range bound.

Euro and yen are stronger.

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

Gold futures are at $1298, silver futures are at $17.90, and oil futures are $45.96.

S&P 500 resistance levels are 2100, 2111 and 2132; support levels are 2038,  2017, and 2000.

DJIA futures are up 52 points.

What To Do Now?

It is important for investors to look ahead and not in the rear view mirror.

Consider continuing to hold existing positions. Based on individual risk preference, consider holding cash or treasury bills 30 – 42%, and short to medium-term hedges of  30%.

It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.  When adjusting hedge levels, consider adjusting partial stop quantities for stock positions (non ETF); consider using wider stops on remaining quantities and also allowing more room for high beta stocks.  High beta stocks are the ones that move more than the market.

A Reminder 

As our long time subscribers know well, that during the 2008 and early 2009 market crash, when stock market lost about 50%, subscribers to The Arora Report made money by the boat load.  For long only investors, this remarkable performance was achieved by using inverse ETFs.

Our models do not expect a repeat of 2008.  In the most likely worst case, there may be a garden variety bear market that typically occurred every 18 to 24 months prior to the recent six-year market run.

Individual Trades

Please click on Home on the left side of the Menu.  Scroll down on the Home Page for individual trades.

Click on the Search by Symbol/Tag on the right hand side and click on the symbols of interest.

 

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