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.
WAGE GAINS ACCELERATE, TRUMP SUSPENSE, RAISE CASH AND HEDGES
To gain an edge, this is what you need to know today.
Wage Gains Accelerate
Nonfarm Private Payrolls came at 204K vs. 175K consensus. The most important item from the jobs report is that the average hourly earnings month over month increased by 0.4% vs. 0.2% consensus.
The implication of this report for investors is that it is supportive of further interest rate hikes by the Fed. As the Fed raises rates, bonds become more competitive with stocks. If rates continue to rise it will be negative for stocks as money will start moving out of stocks and into bonds. However at this time, the market is focused on a strong economy as shown by the jobs report and ignoring rising interest rates.
Trump Suspense
There is a big suspense ahead. Legally now Trump can impose tariffs on $200 billion of additional Chinese goods at any time. Only Trump knows what he plans to do. If he goes ahead with the tariffs, the stock market may fall. On the other hand if he is softer on China, expect the stock market to rocket up.
Out of abundance of caution, the plan is to slightly increase the cash and raise hedges. Please scroll down to see the ‘What To Do Now’ section.
Momo Crowd And Smart Money In Stocks
The momo crowd is selling stocks this morning in the early trade. The momo crowd is especially aggressive in selling popular high beta stocks such as Amazon (AMZN), Facebook (FB), Tesla (TSLA) and Google (GOOG) (GOOGL).
The smart money is also lightly selling stocks.
Gold
Gold is seeing selling after the jobs report. The reason is that gold does not like higher interest rates.
Oil
Trading in oil is listless as traders await Trump’s decision on tariffs. If Trump imposes tariffs, oil may fall assuming nothing else changes.
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.
The dollar is stronger after the jobs report.
Interest rates are ticking up and bonds are ticking down after the jobs report.
Gold futures are at $1200, silver futures are at $14.16, and oil futures are $67.42.
S&P 500 resistance levels are 2918, 2925 and 2950; support levels are 2860, 2840 and 2800.
DJIA futures are down 109 points.
INITIAL CLAIMS HIT 48 YEAR LOW, WAIT BEGINS FOR MOTHER OF ALL REPORTS
To gain an edge, this is what you need to know today.
Initial Claims Hit 48 Year Low
Initial Jobless Claims came at 203K vs. 214K consensus. This is a 48 year low. This indicates that employers in the United States are very reluctant to let workers go because finding new employees has become difficult. This is a leading indicator and carries heavy weight in our timing models.
The Mother Of All Reports
For investors, the mother of all economic reports is the employment report that will be released tomorrow morning at 8:30 am ET. Often stocks run up on Thursday in anticipation of a good report on Friday.
ADP Report
ADP is the largest private payroll processor in the country. ADP uses its data to provide the employment change report ahead of the official employment report. ADP came at 163K vs. 186K consensus. This is a weak report. However the stock market may take it as a positive believing that if the report tomorrow is also weak, it will be more difficult for the Fed to raise interest rates.
Momo Crowd And Smart Money In Stocks
The momo crowd is buying stocks in the early trade. The smart money is inactive.
Gold
Gold is seeing considerable buying by the momo crowd. Gold is also getting a lift from a weaker dollar.
The smart money is inactive.
Oil
API data was bearish. However the momo crowd bought the dip.
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 but can quickly swing to negative.
Interest rates are ticking down and bonds are ticking up.
The dollar is weak.
Gold futures are at $1209, silver futures are at $14.25, and oil futures are $68.89.
S&P 500 resistance levels are 2918, 2925 and 2950; support levels are 2860, 2840 and 2800.
DJIA futures are up 44 points.
TRADE WAR FEARS AS COMMENT PERIOD ENDS TOMORROW, MONEY MOVES FROM CRYPTOCURRENCIES TO MARIJUANA STOCKS
To gain an edge, this is what you need to know today.
Trade War
Public comment period for imposing tariffs on $200 billion worth of additional goods from China will end tomorrow. This is causing a concern and downdraft in the markets all over the world.
Money Moving From Cryptocurrencies To Marijuana Stocks
Money is aggressively moving from cryptocurrencies to marijuana stocks. This is causing the short squeeze in several marijuana stocks to extend.
Momo Crowd And Smart Money In Stocks
Both momo crowd and smart money are inactive.
Economic Data
China’s August Caixin Services PMI came at 51.5 vs. 52.7 consensus. This is the lowest level since late 2017.
India’s August Service PMI came at 51.5 vs. 54 consensus.
Australia’s Q2 GDP came at 0.9% vs. 0.8% consensus.
Eurozone’s August Services PMI came at 54.3% vs. 53.9 consensus.
The concern is that economic data is weakening in China and this may ultimately have a negative effect on the U. S. stock market.
Gold
Gold is seeing some buying from China. Momo crowd and smart money are inactive.
Oil
Oil is pulling back as Gordon did no damage to the oil platforms. Please see yesterday’s Morning Capsule for our analysis.
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 start out negative.
Interest rates are ticking down and bonds are ticking up.
The dollar is weaker.
Gold futures are at $1201, silver futures are at $14.19, and oil futures are $69.21.
S&P 500 resistance level is 2918; support levels are 2860, 2840 and 2800.
DJIA futures are down 62 points.
WEAKEST SEASONAL PERIOD BEGINS BUT A DIP LIKELY TO BE A BUYING OPPORTUNITY, OIL OVER $70
To gain an edge, this is what you need to know today.
Weakest Seasonal Period
History does not always repeat itself. None the less, it is important to pay attention to history. Historically September and October are the weakest months of the year.
There will also be additional uncertainty going into mid-term elections in early November.
Typically after this weak period and after the mid-term election uncertainty lifts, the market rises in November and December.
The tentative plan is to wait patiently and buy the dips over the next couple of months unless something fundamental changes. It is always good to have a plan but markets are in a flux. For this reason constant monitoring of new data is needed.
Momo Crowd And Smart Money In Stocks
The momo crowd is buying stocks in the early trade. The smart money is lightly selling stocks.
Trade War Concerns
Trump has issued a warning that Canada may be left out of a great deal.
This morning there are also increasing concerns that the conflict with China over trade will escalate.
Gold
The dollar is rising on trade war concerns. Gold is priced in dollars. When the dollar rises, gold falls. This is exactly what is happening this morning.
Oil
Oil rises sharply. Tropical storm Gordon is likely to become a hurricane. In preparation, two Gulf of Mexico oil platforms have been evacuated. This is causing oil to rise sharply. Oil is breaking above the resistance at $70.
Many gurus are out this morning predicting that this technical breakout will carry oil to $80. We just want to let you know that most of these gurus have been consistently wrong. If there is no damage to the oil platforms, oil is likely to pull back.
Based on our sources, there is no way to tell at this time if the oil platforms will sustain any significant damage.
Technical Patterns
Regional banks have traced an Engulfing Line. This is bullish. ETF of interest is KRE.
Emerging markets have traced an Inside Bar. This is bullish. ETF of interest is EEM.
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.
Interest rates are ticking up and bonds ticking down.
Gold futures are at $1198, silver futures are at $14.20, and oil futures are $71.16.
S&P 500 resistance levels are 2918, 2925 and 2950; support levels are 2860, 2840 and 2800.
DJIA futures are down 82 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 21% – 31% and short to medium-term hedges of 10% – 15% and very short term hedges of 10% – 15%.
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