(The Weekly Digest reproduces the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers. )
CHINA WORSE THAN CONSENSUS, KURODA STUNS AND QUADRUPLE WITCHING
This is what you need to know today.
According to the fourth quarter China Beige book, a private survey by a New York based outfit, economic conditions in China are much worse than the government issued numbers. This is consistent with our analysis. We have been sharing with you for years that official economic numbers released by the Chinese government are suspect.
Kuroda of Bank of Japan produced a stunner by expanding QE to a large number of ETFs beyond bonds. However, the amount of QE has not been increased. It is likely that Bank of Japan is running out of bonds it can buy.
Today is quadruple witching. Most of the buying related to quarter quadruple witching was done earlier in the week. Now it is a race between market makers wanting the maximum number of options to expire worthless and buyers of the options who want options to pay off. In the early trade, this is causing significant downward pressure.
Gold and bonds are experiencing safe haven buying.
Oil is range bound. Oil futures expire on Monday. This is bringing extra volatility to the oil market.
Dollar is range bound.
Our very, very short-term early stock market indicator is neutral but the market may start on a negative note.
What To Do Now?
It is important for investors to look ahead and not in the rear view mirror.
Consider only adding new positions per new posts since October 1st.
Consider continuing to hold existing positions. Based on individual risk preference, continue to hold 30-50% cash or hedges.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.
Gold futures are at $1056, silver futures are at $13.80, and oil futures are $35.98.
S&P 500 resistance levels are 2038, 2063, and 2100; support levels are 2000, 1962, and 1920.
DJIA futures are down 83 points.
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.
DOLLAR GAINS AND GOLD GIVES UP ALL ITS GAINS FROM SHORT SQUEEZE, QUADRUPLE WITCHING ON THE UPSIDE
This is what you need to know today.
After waffling yesterday, now dollar is showing decisive gains.
Gold has given all of its gains from short squeeze.
Oil and interest rates are range bound.
After the Fed decision, the momo crowd is trying to run stocks to new highs.
Quadruple witching appears to be on the upside, but most of the upside action may have taken place.
Our very, very short-term early stock market indicator is neutral but the market is likely to start out positive.
What To Do Now?
It is important for investors to look ahead and not in the rear view mirror.
Consider only adding new positions per new posts since October 1st.
Consider continuing to hold existing positions. Based on individual risk preference, continue to hold 30-50% cash or hedges.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.
Gold futures are at $1059, silver futures are at $14.01, and oil futures are $36.92.
S&P 500 resistance levels are 2100, 2111, and 2132; support levels are 2038, 2017, and 2000.
DJIA futures are up 64 points.
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.
CUSTOMARY PRE-FED RALLY, PAY ATTENTION TO MARKET POSITIONING AND OPPORTUNITIES TO BUY AT A DISCOUNT
This is what you need to know today.
Rally
It is common for the stock market to rally right before a Fed meeting. Yesterday was no different. The rally is likely to continue, at least at the open.
The key question is the following:
What will happen to various markets after the Fed announcement?
The answer depends upon the following three factors.
- Does the Fed raise interest rates? There is a 90% probability that the Fed will.
- What will be the forward guidance from the Fed?
- Positioning of various markets ahead of the Fed.
Market Positioning
It is important to pay attention to positioning of various markets ahead of the Fed. When market participants are overwhelmingly on one side, it is common for the move in that market to be contrary to common sense. This is where a lot of money can be made in a short time.
Here is the positioning of various markets ahead of the Fed.
- Gold — very short
- Silver — extremely short
- Copper — short
- Dollar — extremely long
- Bonds — long
- Oil — short
- Stocks — very long
Opportunities To Buy At A Discount
Depending upon what the Fed does, this year there may be more opportunities than usual year ends in closed end funds to buy assets at a discount. It may be possible to buy at a discount of 20% plus to net asset value.
Closed end funds are similar to ETFs but often trade at a premium or discount to their net asset value. The reason is that closed end funds have a fixed number of shares and unlike ETFs they do not have the ability to add or shrink the number of shares outstanding on an ongoing basis.
This year closed end discounts are likely to temporarily widen at the year end providing significant opportunities.
As has been customary over the years, this closed end bonanza for the year end will be published in ZYX Global Multi Asset Allocation Alert. Any opportunities in emerging markets will be published in ZYX Emerging Markets ETF Alert.
Other
Oil is beginning to give up some of the gains from short squeeze yesterday.
Gold and silver are starting a short squeeze.
Bonds, interest rates and dollar are range bound.
Our very, very short-term early stock market indicator is neutral but the market is likely to start on a strong positive note.
What To Do Now?
It is important for investors to look ahead and not in the rear view mirror.
Consider only adding new positions per new posts since October 1st.
Consider continuing to hold existing positions. Based on individual risk preference, continue to hold 30-50% cash or hedges.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.
Gold futures are at $1073, silver futures are at $14.12, and oil futures are $36.75.
S&P 500 resistance levels are 2063, 2100, and 2111; support levels are 2038, 2017, and 2000.
DJIA futures are up 98 points.
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.
FEAR DISAPPEARS QUICKLY, FED WAIT BEGINS
This is what you need to know today.
It did not take long for the fear that prevailed in the markets yesterday morning to disappear. Oil moved up on rumors that an OPEC official claimed prices will not stay low for long. Shorts were forced to cover causing a short squeeze in oil and stocks.
The two-day Fed meeting starts today. The Fed will announce its policy tomorrow at 2:00 pm ET. There is about 90% probability of a 0.25% rate increase.
Janet Yellen will hold a press conference at 2:30 pm ET. We will be carefully listening to figure out the future course of interest rates. Is it one and done or the start of a series of increases? In all likelihood, she is going to say that it is data dependent.
In a rare move, Smart Money started buying gold yesterday morning when the panic began. Smart Money quickly and aggressively sold gold and silver as oil and junk bonds moved up.
Oil is hanging near its highs.
Bonds are falling as investors aggressively sell them to buy stocks.
Interest rates are rising.
Dollar is gaining slightly.
Our very, very short-term early stock market indicator is neutral but the market is likely to start out positive.
What To Do Now?
It is important for investors to look ahead and not in the rear view mirror.
Consider only adding new positions per new posts since October 1st.
Consider continuing to hold existing positions. Based on individual risk preference, continue to hold 30-50% cash or hedges.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.
Gold futures are at $1061, silver futures are at $13.70, and oil futures are $36.47.
S&P 500 resistance levels are 2038, 2063, and 2100; support levels are 2017, 2000, and 1962.
DJIA futures are up 150 points.
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.
FEAR IN OIL AND JUNK BONDS SPOILS BUDDING STOCK RALLY
This is what you need to know today.
Finally there was decent economic data from China and based on trading over seas, U. S. stock futures were staging a big rally early this morning. Then fear swept through the oil and junk bond markets. Brent crude fell below $37.00. WTI crude fell below $35.00. As of this writing the fear in oil and junk bonds is spoiling the budding rally in stocks.
Gold and silver were losing steam on the prospects of rising interest rates when Smart Money stepped in to buy gold and silver in reaction to the fear in the oil and junk bond markets. As of this writing, gold and silver are staging a nice rally from their early morning lows.
In Argentina, the newly elected president scraps export tax on agricultural commodities. This is a good indication that it is time to scale in Argentina.
In South Africa, rand, staged a massive rally as the president fired his newly appointed finance minister and replaced him with a well respected figure. In spite of the rally, it is too early to start a long position in South Africa. Details of positions in Argentina and South Africa will be published in ZYX Emerging Markets ETF Alert.
Bonds are giving some of their gains from Friday.
Interest rates are ticking up higher.
Euro and yen are staying strong against the dollar.
We are switching to March stock futures because they are offering more liquidity.
Our very, very short-term early stock market indicator is neutral.
What To Do Now?
It is important for investors to look ahead and not in the rear view mirror.
Consider only adding new positions per new posts since October 1st.
Consider continuing to hold existing positions. Based on individual risk preference, continue to hold 30-50% cash or hedges.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.
Gold futures are at $1071, silver futures are at $13.77, and oil futures are $35.41.
S&P 500 resistance levels are 2017, 2038, and 2063; support levels are 2000, 1963, and 1920.
DJIA futures are up 19 points.
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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