By Nigam Arora & Dr. Natasha Arora
The Best Long Term Opportunity
Please click here for a chart of S&P 500 ETF (SPY) which represents the benchmark stock market index S&P 500 (SPX).
Note the following:
- The chart compares SPY with India ETF (EPI) and China ETF (ASHR).
- The chart shows that over the last year EPI has moved up 61.71%, SPY has moved 27.78% and ASHR has moved up 6.56%.
- We have repeatedly stated that India represented the best opportunity for long-term investors. That call has proven spot on.
- The performance of the Indian stock market shows why all investors should consider diversifying in international markets.
- India ETF EPI is in the Model Portfolio in ZYX Global Allocation. India and China have also been continuously followed in ZYX Emerging for a long time.
- The underperformance of China shown on the chart illustrates why investors need to be careful when buying emerging markets.
- As a note of caution, do not rush out to buy India. The Indian market is very expensive on a valuation basis and is technically overbought. It is important to wait for a pullback in the buy zone.
Inflation And Earnings Concerns
We previously shared with you that the U. S. stock market rallied on good earnings. But in our analysis, the underlying assumption was not sound. Earnings season has just started. Investors extrapolated from a handful of good earnings at the beginning of the season that all earnings would be good. Over the weekend, many investors are coming to the same conclusion that we shared with you early last week.
More and more investors are also realizing that the Fed has been wrong about inflation.
The foregoing two factors are bringing selling into the stock market in the early trade from the non-momo crowd.
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 as money continues to move to bitcoin. 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 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 $1762, silver futures are at $23.28, and oil futures are at $82.62.
S&P 500 futures resistance levels are 4460, 4600, and 4900: support levels are 4400, 4318, and 4200.
DJIA futures are down 176 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, 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, the 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.
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This post was just published on ZYX Buy Change Alert.
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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.
