By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
America Party
Please click here for a chart of M2 money supply (M2).
Note the following:
- The chart shows M2 money supply rose sharply during the pandemic. The M2 money supply represents the total amount of money in circulation that includes M1 (cash and checking accounts) plus savings accounts, small deposits, and retail money market funds.
- The chart shows that when the government free money train stopped, M2 money supply dipped.
- The chart shows that M2 money supply has been rising since last year.
- The chart shows that M2 money supply has hit a new record.
- As M2 money supply hits a new record, part of the liquidity created by more money circulation is going into the stock market causing the stock market to rise.
- The ‘One Big Beautiful Bill Act’ (OBBBA) is projected to increase the Federal Deficit by $2.8T over the next decade and will likely fuel money supply increase.
- In The Arora Report analysis, the realistic cost of OBBBA is $5T, and not $2.8T, as politicians are unlikely to end Trump’s temporary tax cuts.
- For prudent investors, mounting debt is a concern as it is not sustainable in the long term. In contrast, for the momo crowd, mounting debt is a reason to buy stocks as some of the borrowed money flows into the stock market.
- There is some selling in the stock market in the early trade for three reasons:
- Musk is forming the America Party to challenge the excessive spending and borrowing.
- Trump is threatening BRICS with 10% tariffs for Anti-American policies. BRICS originally included Brazil, Russia, India, China, and South Africa, and recently added Egypt, The United Arab Emirates, Ethiopia, Indonesia, and Iran. BRICS over the weekend, expressed ‘serious concerns about the rise of unilateral tarrif and non-tarrif measures.’
- There is also concern about the approaching July 9th tariff deadline.
- In The Arora Report analysis, the momo crowd’s concern about the America Party is valid. If the America Party gains traction, it will be a negative for the present policy of reckless borrowing and spending. It will be negative in the short term to medium term for the stock market but positive for the stock market in the very long term. It is worth a reminder that the momo crowd is always exclusively focused on the short term and doesn’t care about the long term.
- TSLA stock is down about 6% in the early trade on Musk forming the America Party. There are twin concerns here:
- Musk will be distracted.
- President Trump may retaliate against TSLA.
- In the early trade, the momo crowd is aggressively buying the shallow dip in the stock market.
- As an actionable item, the sum total of the foregoing is in the Arora Protection Band, which strikes the optimum balance between various crosscurrents. Please scroll down to see the Arora Protection Band. The Arora Protection Band is one of the large number of unique edges that are available to members of The Arora Report.
Magnificent Seven Money Flows
In the early trade, money flows are positive in Amazon (AMZN) and Microsoft (MSFT).
In the early trade, money flows are negative in Nvidia (NVDA), Alphabet (GOOG), Meta (META), TSLA, and Apple (AAPL).
In the early trade, money flows are negative in S&P 500 ETF (SPY) and in Nasdaq 100 ETF (QQQ).
Momo Crowd And Smart Money In Stocks
The momo crowd is *** (To see the locked content, please take a 30 day free trial) in the early trade. Smart money is *** in the early trade.
Note for new members: Smart money often sells into the strength generated by momo crowd buying and buys into the weakness generated by momo crowd selling. Over a long period of time, investors come out ahead by adopting smart money’s ways. The exception is in a raging bull market – for very short term trades, consider following the momo crowd and not smart money. Smart money is an important indicator but is only one of hundreds of indicators that go into determining the Arora Protection Band and signals. Please click here and here to understand how signals are generated.
Very Very Short-Term Indicator
The Arora Report’s proprietary 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.
Gold
The momo crowd is *** gold in the early trade. Smart money is *** in the early trade.
For longer-term, please see gold and silver ratings.
Oil
In a strange twist of events, OPEC+ plans to increase oil supply by more than expectations but Saudi Arabia is planning to increase oil prices next month. The reason Saudi is able to increase prices even when supply is being increased is that summer is a peak demand season in the Northern Hemisphere.
The momo crowd is *** in the early trade. Smart money is *** in the early trade.
For longer-term, please see oil ratings.
Bitcoin
Bitcoin (BTC.USD) is seeing mild buying.
Markets
Interest rates are ticking up and bonds are ticking down.
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.
S&P 500 futures are trading at 6314 as of this writing. S&P 500 futures resistance levels are 6500 and 6700 ; and support levels are 6256, 6131, and 6017.
DJIA futures are up 30 points.
Gold futures are at $3314, silver futures are at $36.12, and oil futures are at $67.05.
Arora Protection Band And What To Do Now
It is important for investors to look ahead and not in the rearview mirror. The proprietary Arora Protection Band from The Arora Report is very popular. The Arora Protection Band puts all of the data, all of the indicators, all of the news, all of the crosscurrents, all of the models, and all of the analysis in an analytical framework that is easily actionable by investors.
Consider continuing to hold good, very long term, existing positions. Based on individual risk preference, consider holding *** in cash, Treasury bills, short term fixed income, 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, the total cash level should be more than stated above but significantly less than cash plus hedges.
A protection band of 0% would be very bullish and would indicate full investment with 0% in cash. A protection band of 100% would be very bearish and would indicate a need for aggressive protection with cash and hedges or aggressive short selling.
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.
Traditional 60/40 Portfolio
Probability based risk reward adjusted for inflation does not favor long duration strategic bond allocation at this time.
Those who want to stick to traditional 60% allocation to stocks and 40% to bonds may consider focusing on only high quality bonds and bonds of five year duration or less. Those willing to bring sophistication to their investing may consider using bond ETFs as tactical positions and not strategic positions at this time.
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Nigam Arora
Nigam Arora is known for his accurate stock market calls. Nigam is a distinguished master of the macro. He is a popular columnist with over 100 million page views, an engineer, and nuclear physicist by background. Nigam has founded two Inc. 500 fastest growing companies and has been involved in over 50 entrepreneurial ventures. He is the developer of Theory ZYX of Successful Change Management and is the author of the book on Theory ZYX, as well as the developer of the ZYX Change Method for Investing.
Dr. Natasha Arora
Dr. Natasha Arora has significant expertise in investment analysis especially biotech, healthcare, and technology. Natasha is a graduate of Harvard Medical School followed by a postdoc at MIT. She has published several peer reviewed research papers in top science journals.
