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 REVERSES COURSE — MOMO CROWD LOVES MORE BORROWING
To gain an edge, this is what you need to know today.
Trump Reverses Course
Please click here for a chart of transportation ETF (IYT)
Note the following:
- Trump has once again reversed course on stimulus.
- Trump now wants a big deal.
- Trump appears to be willing to borrow more than he has previously wanted.
- Pelosi has stood firm on large borrowing and a large package.
- Trump appears to be moving closer to Pelosi’s position and giving in to Pelosi on some points.
- The momo crowd loves more borrowing. After all, the momo crowd has made money from heavy borrowing and money printing.
- The chart shows that transport ETF IYT is breaking out.
- The chart shows that the prior pullback in IYT was shallow.
- RSI on the chart shows that there is room to run.
- The move in transports is interesting in that IYT not only contains trucking and railroad stocks, it also contains airlines. Airlines have not been doing well.
- The economy is strong and this is bringing strength to trucking and railroads.
- In the face of the strength in the economy, politicians are heading towards huge borrowing and spending to stimulate the economy that is already red hot in many areas.
- The attempts among some prudent politicians to have a narrowly tailored package to help only those who need help have failed.
Momo Crowd And Smart Money In Stocks
The momo crowd is 🔒 (To see the locked content, please take a 30 day free trial) stocks in the early trade. Smart money is🔒 inactive.
Gold
Money is flowing into gold on the prospect of more borrowing.
The momo crowd is 🔒gold in the early trade. Smart money is🔒.
For longer term, please see gold and silver ratings.
Oil
The momo crowd is 🔒oil in the early trade. Smart money is🔒
For longer term, please see oil ratings.
Markets
Our very, very short-term early stock market indicator is🔒. 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 weaker.
Trading futures is not recommended for most investors. The purpose of providing this information is to give an indication of the premarket activity that usually guides the activity when the market opens.
Gold futures are at $1927, silver futures are at $24.76, and oil futures are $41.04.
S&P 500 futures resistance levels are 3460, 3520 and 3600: support levels are 3420, 3390 and 3320.
DJIA futures are up 141 points.
Protection Bands and 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 🔒in cash or treasury bills or short term bond funds or allocated to short term tactical trades and short to medium-term hedges of 🔒and short term hedges of 🔒. This is a good way to protect yourself and participate in the upside at the same time.
You can determine your protection bands by adding cash to hedges. The high band of the protection is appropriate for those who are older or conservative. The low band of the protection is appropriate for those who are younger or aggressive. If you do not hedge, total cash level should be more than stated above but significantly less than cash plus hedges.
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.
TRUMP RUNS THE MARKET HIGHER, ELEVATED JOBLESS CLAIMS
To gain an edge, this is what you need to know today.
Trump Runs Up The Market
Please click here for a chart of S&P 500 ETF (SPY) which represents benchmark stock market index (SPX).
Note the following:
- Trump says stimulus talks are on track.
- The momo crowd is excited about Trump’s change in tactics and hope for more borrowing and spending.
- The chart shows that the market is beginning to make a higher high on a micro-scale. From a traditional technical analysis perspective, this is bullish.
- The chart shows the market is opening above the breakout line. This is also bullish from a traditional technical analysis point of view.
- RSI shows that there is room to run.
- Pelosi’s public statements are not supportive of the comprehensive agreement on stimulus. However, the market is ignoring Pelosi and believing Trump at this time. Investors need to be cautious if Pelosi does not change her stance or Trump does not agree to borrow the amount that Pelosi wants.
Jobless Claims
Weekly Initial Jobless Claims came at 840K vs. 830K consensus. This is an elevated level and progress on the job front appears to have stopped. There have been brief periods when the market cared about the progress on jobs. However, right now, the market is ignoring the jobs data and is simply focused on more borrowing and spending in one or more stimulus packages.
Momo Crowd And Smart Money In Stocks
The momo crowd is🔒stocks in the early trade. Smart money is🔒.
Gold
Money is coming back into gold on the hope of more stimulus related borrowing.
The momo crowd is 🔒 gold in the early trade. Smart money is🔒.
For longer term, please see gold and silver ratings.
Oil
The momo crowd is 🔒 oil in the early trade. Smart money is 🔒.
For longer term, please see oil ratings.
Markets
Our very, very short-term early stock market indicator is 🔒. 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 down and bonds are ticking up.
The dollar is stronger.
Trading futures is not recommended for most investors. The purpose of providing this information is to give an indication of the premarket activity that usually guides the activity when the market opens.
Gold futures are at $1904, silver futures are at $24.22, and oil futures are $40.82.
S&P 500 futures resistance levels are 3460, 3520 and 3600: support levels are 3420, 3390 and 3320.
DJIA futures are up 193 points.
AGGRESSIVE MOMO BUYING ON TRUMP CHANGING TACTICS
To gain an edge, this is what you need to know today.
Trump Changing Tactics
Please click here for a chart of S&P 500 ETF (SPY) that represents the benchmark stock market index (SPX).
Note the following:
- Yesterday the stock market dropped when Trump stopped negotiations with Democrats over the stimulus. Trump was clear that he will negotiate after the election.
- As described in yesterday’s Afternoon Capsule, the VUD indicator did not show much net supply of stocks even though the price dropped. The insight from the VUD indicator was spot on as you can tell from the market moving up this morning. Please click here for the chart showing the VUD indicator.
- There are reports that Trump came under heavy pressure from Republicans who are in tight races.
- Last night Trump changed the tactics. Trump is now talking about individual packages such as those for airlines, small businesses and $1,200 free money for everyone.
- It is not clear if Pelosi will support individual packages.
- At this point, unfortunately, both parties have made helping people who need the help a political football.
- The chart shows that yesterday the market dropped below the breakout line.
- The chart shows that this morning the market is above the breakout line.
- The latest move by Trump has put RSI on a buy signal.
- The next move in the stock market will depend on Pelosi’s reaction. If she agrees with Trump, expect the market to go higher.
- It is worth a reminder that this market is not about the economy or the earnings or the long term prosperity. This market is about borrowing more and printing more money.
Momo Crowd And Smart Money In Stocks
The momo crowd is 🔒 stocks in the early trade. Smart money is 🔒.
Gold
The momo crowd is 🔒 gold in the early trade. Smart money is 🔒.
For longer term, please see gold and silver ratings.
Oil
API inventory data was bearish. Crude inventories came at +951K barrels vs. a consensus of +400K barrels.
The momo crowd is🔒 oil in the early trade. Smart money is 🔒.
For longer term, please see oil ratings.
Markets
Our very, very short-term early stock market indicator is 🔒. 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 weaker.
Trading futures is not recommended for most investors. The purpose of providing this information is to give an indication of the premarket activity that usually guides the activity when the market opens.
Gold futures are at $1891, silver futures are at $23.74, and oil futures are $39.73.
S&P 500 futures resistance levels are 3390, 3420 and 3460: support levels are 3320, 3278 and 3228.
DJIA futures are up 198 points.
INTEREST RATE RISE SHOWS WALL STREET SHIFTING TO BIDEN WIN, HOME PRICES RISE
To gain an edge, this is what you need to know today.
Interest Rate Rise
Please click here for a chart of bond ETF (TLT).
Note the following:
- At The Arora Report we are politically agnostic. Our sole job is to help investors. Being neutral allows us to clearly see the data without coloring with a bias. This is the reason we made the correct call of Trump election when Wall Street had universally anointed Hilary Clinton as the next president. By staying neutral, when Trump was elected and the stock market was falling due to Wall Street’s predictions of massive losses, our call was to buy aggressively. This turned out to be the right call. As Trump took the lead, gold was rocketing. Our call was to short sell gold right at the top. Gold fell about $200 in a very short time. The headline of a major business publication was, “Arora report creates ripples in bullion market.”
- Trump supporters are encouraged because they believe Trump came out triumphant from coronavirus illness.
- Biden supporters are encouraged because the latest polls show that Biden is increasing his lead over Trump.
- Investors should remember that during the last election and during Brexit, polls were wrong. The Arora Report was one of the rare services that called Brexit correctly going against the polls.
- The most significant data point is shown on the chart.
- Bonds move inverse to interest rates.
- Interest rates are rising and thus bonds are falling.
- The chart shows a double top in bonds. In traditional technical analysis, this is a negative pattern.
- The chart shows that TLT gapped down.
- The chart shows that TLT broke down below the support.
- The breakdown in bonds is due to Wall Street increasingly calling a blue sweep.
- It is true that Trump has increased the national debt in a major way. We have been very critical of heavy borrowing. As we have written before, Biden will borrow even more than Trump and that is not good in the long term for investors and America.
- The breakdown in bonds shows that Wall Street is coming to the view we have been expressing for a while.
- What is the impact on the stock market? If the levitation in this stock market was not an artificial construct due to money printing and heavy borrowing, we would be giving a major sell signal for the stock market. However, the reality is that this stock market is an artificial construct. As interest rates start rising, due to potential heavy Biden borrowing, the Fed is likely to step in to buy bonds. Such Fed action will increase the demand for bonds and thus reduce the interest rates.
- Under these circumstances, at least for now, there is no change in our prior stance but investors need to stay alert. Please pay attention to ‘Protection Bands and What To Do Now?’
- For the short term it is a positive for the stock market because the momo crowd is aggressively buying on the prospect of heavy Biden borrowing.
Home Prices
Home prices increased 5.9% year over year. This is the fastest rate in two years.
Momo Crowd And Smart Money In Stocks
The momo crowd is 🔒 in the early trade. Smart money is 🔒.
Gold
Money is beginning to flow into gold on the prospect of Biden borrowing.
The momo crowd is 🔒 gold in the early trade. Smart money is🔒.
For longer term, please see gold and silver ratings.
Oil
The momo crowd is 🔒 oil in the early trade. Smart money is 🔒.
For longer term, please see oil ratings.
Markets
Our very, very short-term early stock market indicator is 🔒. 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 weaker.
Trading futures is not recommended for most investors. The purpose of providing this information is to give an indication of the premarket activity that usually guides the activity when the market opens.
Gold futures are at $1923, silver futures are at $24.42, and oil futures are $40.66.
S&P 500 futures resistance levels are 3420, 3460 and 3520: support levels are 3390, 3320 and 3278.
DJIA futures are up 140 points.
MOMO BUYS ON TRUMP’S SHOW OF STRENGTH AND POTENTIAL FOR MORE BORROWING
To gain an edge, this is what you need to know today.
Optimism
Please click here for a chart of S&P 500 ETF (SPY) that represents the stock market benchmark index (SPX).
Note the following:
- Trump released a video about 45 minutes before the futures opened last evening. The video led to futures opening gap up.
- To show strength, Trump drove by his supporters in a SUV yesterday evening. This caused even more buying in the futures yesterday.
- Trump has been busy tweeting. His tweets are causing optimism that his illness has increased the chances of more government borrowing for another massive stimulus package. Some senators who had expressed concerns about more borrowing when the economy is doing well are getting sidelined.
- The chart shows that even after the big rise in the premarket, SPY is still below the breakout line.
- SPY will need to cross above the breakout line to bring more technically oriented buying into the stock market.
- RSI on the chart shows that the market can go either way at this time.
- There is potential for a short squeeze as those who sold short on Trump’s illness may be forced to buy to cover. If such a short squeeze starts, it has the potential to move the stock market considerably higher.
- Prudent investors should note that this virus is unpredictable. There have been many cases of patients initially feeling well and then all of a sudden taking a turn for the worse. As of this writing, President Trump appears to be feeling well. There is talk of him returning to the White House today.
- Knowing Trump, he may want a photo op of returning to the White House while the stock market is still open. If he manages such a photo op, the stock market may run even higher.
- The big unknown is smart money. Smart money has recently tended to sell into the strength bringing the market down. Will they sell again today?
Momo Crowd And Smart Money In Stocks
The momo crowd is 🔒 in the early trade. Smart money is🔒.
Gold
The momo crowd is 🔒gold in the early trade. Smart money is 🔒.
For longer term, please see gold and silver ratings.
Oil
There are fears of a storm threatening to shut down Gulf of Mexico oil production.
The momo crowd is 🔒oil the early trade. Smart money is 🔒.
For longer term, please see oil ratings.
Markets
Our very, very short-term early stock market indicator is 🔒. 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 weaker.
Trading futures is not recommended for most investors. The purpose of providing this information is to give an indication of the premarket activity that usually guides the activity when the market opens.
Gold futures are at $1913, silver futures are at $24.16, and oil futures are $38.94.
S&P 500 futures resistance levels are 3390, 3420 and 3460: support levels are 3320, 3278 and 3228.
DJIA futures are up 201 points.
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