WEEKLY STOCK MARKET DIGEST: STOCK MARKET EXCITED ABOUT YELLEN — HEAVY BORROWING AHEAD

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 ‘Protection Bands and What To Do Now.’

STOCK MARKET EXCITED ABOUT YELLEN — HEAVY BORROWING AHEAD

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

Yellen Rally Extends

Please click here for a chart of S&P 500 ETF () which represents stock market benchmark index ().

Note the following:

  • In yesterday’s Afternoon Capsule, we shared with you that the market was rallying on the Yellen appointment.
  • As the chart shows, this morning the stock market continues to rally on Yellen appointment.
  • The market loves Yellen because she is a good communicator, is well known, knows how the Fed works and most importantly because she will push more borrowing and more stimulus.
  • As the chart shows, the market is now above the magnet line but still below the vaccine high line.
  • The bulls are now hoping for much higher targets for the stock market.
  • The trend line shown on the chart is a potential target next year.
  • On the negative side, there is no fear in the market.   The prevailing wisdom has become that the market is a one-way street — it only goes up.  Often when such belief becomes the generally accepted wisdom, the market tends to fall.   Please pay attention to the  ‘Protection Bands and What To Do Now?’ section below.

German DAX

DAX in Germany is like  in the United States.  DAX is undergoing its biggest overhaul since 1988.  DAX will now have 40 stocks instead of 30.  Companies will have to report earnings on a quarterly basis.  Many companies in Europe do not report earnings on a quarterly basis.

Bitcoin

Bitcoin is surging on speculative fever.

The momo crowd is selling gold and moving into bitcoin.

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🔒.

Gold

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 and bonds are range bound.

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 $1802, silver futures are at $23.16, and oil futures are $43.84.

S&P 500 futures resistance levels are 2630, 3800 and 4000: support levels are 3520, 3460 and 3420.

 futures are up 305 points.

Protection Bands and What To Do Now?

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

Consider continuing to hold existing positions. Based on individual risk preference, on dips, 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.

THIRD VACCINE BRINGS AGGRESSIVE BUYING

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

Third Vaccine

Please click here for a chart of S&P futures ().

Note the following:

  • This is the third Monday in a row with good news on a vaccine. The vaccine from AstraZeneca () and Oxford is 70% effective. Effectiveness of 90% may be achievable by changing the dosing regimen.  vaccine will be cheaper than the vaccines from Moderna () and Pfizer ().
  • Antibody cocktail from Regeneron Pharmaceuticals () has been approved for coronavirus.
  • The chart shows momo buying on Sunday evening. The momo crowd has a pattern of buying on Sunday evening.
  • The chart shows aggressive buying on the vaccine news.
  • The VUD indicator is the most sensitive measure of net supply demand in real-time. The orange indicates net supply and the green indicates net demand.
  • The VUD indicator on the chart shows that there has been solid net demand for stock futures.

Eurozone PMI

PMI is a leading indicator.

IHS Markit flash composite PMI came at 45.1 vs. 46.1 consensus. The number was 50 in October. A number below 50 indicates economic contraction.

U. S. Economic Data

Just like the data from Europe today, the economic data from the U. S. over the coming weeks is likely to show weakness.

However, right now vaccine news is driving the market.

Smart money pays a lot of attention to the economic data, the momo crowd is almost always oblivious.

Momo Crowd And Smart Money In Stocks

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

Gold

The momo crowd selling in gold is especially noteworthy because the dollar is weaker.  Gold is priced in dollars.  Without aggressive momo crowd selling, gold would have been much higher today.

The momo crowd is 🔒 gold in the early trade. With vaccines coming, the momo crowd does not see any need for safety in gold in the portfolio.  Smart money is 🔒.

For longer-term, please see gold and silver ratings.

Oil

The momo crowd is 🔒 buying 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 $1864, silver futures are at $24.10, and oil futures are $42.96.

S&P 500 futures resistance levels are 3600, 3630 and 3800: support levels are 3520, 3460 and 3420.

DJIA futures are up 127 points.

 

 

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