WEEKLY MARKET DIGEST: WEAK JOBS REPORT GIVES GREEN LIGHT TO THE FED, SILVER OVERBOUGHT $DIA $GLD $QQQ $SLV $SPY $TBT $USO

WEEKLY MARKET DIGEST: WEAK JOBS REPORT GIVES GREEN LIGHT TO THE FED, OVERBOUGHT CONDITION CATCHES UP WITH SILVER $DIA $GLD $QQQ $SLV $SPY $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.

WEAK JOBS REPORT GIVES GREEN LIGHT TO THE FED

To gain an edge, this is what you need to know today.

Weak Jobs Report

Non-farm Private Payrolls came at 96K vs. 145K consensus.

Green Light For The Fed

The weak jobs report is giving the Fed a green light to cut interest rates in the September meeting.

Impact On Stocks

The jobs report presents a mixed picture for stocks.  Bulls have been hoping for a strong jobs report and a rate cut.  Bulls will get the rate cut but the weak jobs report is not positive for future earnings.

Momo Crowd And Smart Money In Stocks

The momo crowd is buying stocks in the early trade.  Smart money is inactive.

Gold

The momo crowd was aggressively selling gold before the jobs report.  Before the jobs report, selling in silver by the momo crowd was especially aggressive.  After the jobs report, the momo crowd is buying gold and silver.

Smart money is also lightly buying gold and silver.  Smart money buying may be related to taking profits on the short positions established yesterday.

Oil

Previously we shared with you that the momo crowd buying oil made no sense.  This morning the momo crowd is aggressively selling oil.

Smart money is inactive.

Marijuana

The momo crowd is aggressively buying marijuana stocks.  Smart money is inactive.

Technical Patterns

Oil stocks are tracing a double bottom.  This is bullish.  ETF of interest is XLE. If deciding to take this trade, carefully watch oil as oil is seeing aggressive momo crowd selling this morning.

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 turn negative.  This indicator, with a great track record, is popular among long term investors to stay in tune with the market and among short term traders to independently undertake quick trades.

Interest rates, bonds and currencies are range bound.

Gold futures are at $1532, silver futures are at $18.86, and oil futures are $55.38.

S&P 500 resistance levels are  3020, 3050 and 3100; support levels are 2950, 2925 and 2918.

DJIA futures are up 86 points.

CHINA BREAKTHROUGH AND FED SUBSERVIENT TO TRUMP — HAVE YOUR CAKE AND EAT IT TOO

To gain an edge, this is what you need to know today.

China Talks

Stock market futures spiked as soon as the news hit that the U. S. and China will schedule high level talks in October. My opinion does not count but the opinion of someone who is apparently connected to the Chinese government does count. China’s Global Times editor tweeted, “There’s more possibility of a breakthrough between the two sides.”  Let’s explore with the help of a chart.

The Chart

Please click here for an annotated chart of S&P 500 ETF (SPY). Similar conclusions can be reached from charts of Dow Jones Industrial Average (DJIA) and Nasdaq 100 ETF (QQQ).  For the sake of complete transparency, this is exactly the same chart that was previously published without any changes.

Note the following:

  • The chart shows a megaphone top pattern.
  • Bears have been making scary predictions saying that this is a bearish pattern and the stock market will fall to the lower trend line. This scenario will cause major losses for buy-and-hold investors who are fully invested.
  • Bulls believe that not only there will be a breakthrough with China, the Fed will be subservient to Trump and aggressively cut rates.
  • If bulls are right, the stock market will break above the rising trend line shown on the chart. This will be a new high for the stock market.

What Does It All Mean?

I have previously written, ‘A megaphone top, when properly formed, can be useful in trading individual securities. However the predictive power for a pattern that is not well formed for the overall stock market is questionable.’ I have also stated that investors ought to be aware of the pattern, but there is no need for dread.

Start with Arora’s Second Law of Investing and Trading: Nobody knows with certainty what is going to happen next in the markets. Bulls believe that a trade deal will occur with China and the Fed will aggressively cut rates. Prudent investors ought to consider an alternate scenario — if there is a trade deal with China, the Fed may not cut interest rates aggressively. If the economy picks up after a trade deal, the Fed may start raising rates again. Under such a scenario gold ETF (GLD), silver ETF (SLV) and precious miner ETF (GDX) will be crushed. Large-cap stocks such as Apple (AAPL), Facebook (FB), Google (GOOG) (GOOGL) and Amazon (AMZN) will move up. Semiconductor stocks such as Intel (INTC), Micron (MU), NVIDIA (NVDA) and AMD (AMD) will be strong performers.

Keep in mind that bulls are not likely to have their cake and eat it too. This is the reason to follow a proven adaptive comprehensive model that has performed well in both bull and bear markets such as ZYX Asset Allocation Model.

ADP

ADP Employment change came at 195K vs. 150K consensus.

Jobless Claims

Jobless Claims came at 217K vs. 215K consensus.

Momo Crowd And Smart Money In Stocks

The momo crowd is aggressively buying stocks.  Smart money is inactive.

Gold

The momo crowd is buying gold and silver.  Smart money is selling gold and silver.

Oil

The momo crowd is aggressively buying oil.  Smart money is inactive.

Marijuana

The momo crowd is buying marijuana. Smart money is also lightly 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.  This indicator, with a great track record, is popular among long term investors to stay in tune with the market and among short term traders to independently undertake quick trades.

Interest rates are ticking up and bonds are ticking down.

The dollar is slightly weaker.

Gold futures are at $1545, silver futures are at $19.33, and oil futures are $56.44.

S&P 500 resistance levels are  3020, 3050 and 3100; support levels are 2950, 2925 and 2918.

DJIA futures are up 275 points.

MOMO BUYS STOCKS ON 5% SURGE IN HONG KONG, AGGRESSIVE BUYING IN SILVER

To gain an edge, this is what you need to know today.

Hong Kong Surges

Stocks in Hong Kong surged 5.4% after the extradition bill was withdrawn. This bill had started the protest movement in Hong Kong.

Momo Crowd And Smart Money In Stocks

The buying in Hong Kong has spread across the globe, first in Asia, then in Europe and finally in the early trade in the United States.

The momo crowd is aggressively buying stocks in the early trade.  Smart money is lightly and selectively selling into the strength.

Gold

The momo crowd is buying gold.  Smart money is inactive.

The momo crowd is aggressively buying silver.  Those thinking of buying silver here may want to exercise patience as silver is very over bought in the short term, fundamentals do not support the present price and the up move is mostly due to the momo crowd.

Oil

Oil is being bought by the momo crowd on the Hong Kong news.   It makes absolutely no sense but the momo crowd is not known for its analysis.  Smart money is inactive.

Marijuana

The momo crowd is buying marijuana in the early trade.  Smart money is inactive.

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 turn negative.  This indicator, with a great track record, is popular among long term investors to stay in tune with the market and among short term traders to independently undertake quick trades.

Interest rates are ticking up and bonds are ticking down.

The dollar is slightly weaker.

Gold futures are at $1552, silver futures are at $19.51, and oil futures are $55.43.

S&P 500 resistance levels are  2950, 3020 and 3050; support levels are 2925, 2918 and 2860.

DJIA futures are up 220 points.

MEGAPHONE TOP PATTERN IN THE STOCK MARKET SOUNDS SCARY BUT NO NEED FOR DREAD

To gain an edge, this is what you need to know today.

Megaphone Top

A megaphone top pattern in the stock market is gaining a lot of publicity often with scary conclusions. Should you sell your stocks based on this pattern? Let’s examine with the help of a chart.

The Chart

Please click here for an annotated chart of S&P 500 ETF (SPY). Similar conclusions can be reached from charts of Dow Jones Industrial Average (DJIA) and Nasdaq 100 ETF (QQQ).

Note the following:

  • As shown on the chart, a megaphone pattern is bound by a rising trend line and a falling trend line.
  • A megaphone top pattern usually occurs after a significant rise.
  • The pattern is typically characterized by high volatility.
  • Traditionally this is considered a topping pattern.
  • As shown on the chart, the prospect of the stock market falling to the lower trend line is indeed scary as it will cause major losses for ‘buy and hold’ investors who are fully invested.
  • As shown on the chart, price has not touched the down sloping line many times. This indicates that there is a potential of a positive resolution. In plain English, an upside breakout has a fair probability.
  • A megaphone top, when properly formed, can be useful in trading individual securities. However the predictive power for a pattern that is not well formed for the overall stock market is questionable.

What Does It Mean?

Investors ought to be aware of the pattern but there is no need for dread. Investors ought to keep the following in the forefront.

  • Follow a proven adaptive comprehensive model that has performed well in both bull and bear markets. An example is ZYX Asset Allocation Model with inputs in 10 categories.
  • The stock market is entering a period of negative seasonality. However this presents opportunities for investors who are holding enough cash and hedges. The Arora Report provides precise levels of cash and hedges to hold under these market conditions.
  • Apple (AAPL) stock is in the cross hairs of the trade war. Keep a close eye on it.
  • Keep a close eye on big cap tech stocks that do not do material business in China. Examples include Facebook (FB), Amazon (AMZN) and Google (GOOG) (GOOGL).
  • Semiconductor stocks are often a leading indicator. Keep a close eye on the stocks of Intel (INTC), AMD (AMD), Micron (MU) and NVIDIA (NVDA).

Momo Crowd And Smart Money In Stocks

The momo crowd is aggressively selling stocks in the early trade.  Smart money is inactive.

Gold

The momo crowd is buying gold.  Smart money is inactive.

Momo crowd buying in silver is especially aggressive.

Oil

The momo crowd is selling oil.  Smart money is inactive.

Marijuana

The momo crowd is lightly selling marijuana.  Smart money is inactive.

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 positive comments that are just coming from China have the potential to reverse this indicator.  This indicator, with a great track record, is popular among long term investors to stay in tune with the market and among short term traders to independently undertake quick trades.

Interest rates, bonds and currencies are range bound.

Gold futures are at $1546, silver futures are at $18.87, and oil futures are $53.11.

S&P 500 resistance levels are  2918, 2925 and 2950; support levels are 2860, 2840 and 2800.

DJIA futures are down 219 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 22% – 32% and short to medium-term hedges of  5% – 15% and short term hedges of 5% – 15%.

 

A knowledgeable investor would have turned $100,000 into over $1,000,000 with the help from The Arora Report. NOW YOU TOO CAN ALSO SPECTACULARLY SUCCEED AT MEETING YOUR GOALS WITH THE HELP OF THE ARORA REPORT. You are receiving less than 2% of the content from our paid services. …TO RECEIVE REMAINING 98% INCLUDING MANY ATTRACTIVE INVESTMENT OPPORTUNITIES, TAKE A FREE TRIAL TO PAID SERVICES.

Please click here to take advantage of a FREE  30 day trial.

Check out our enviable performance in both bull and bear markets.

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