By Nigam Arora & Dr. Natasha Arora
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.’
AUSTRIA SPOILS THE CELEBRATION OF SPENDING $1.75 TRILLION
To gain an edge, this is what you need to know today.
Austria Spoils
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:
- Democrats had planned to pass Biden’s $1.75 trillion spending bill in the House last night.
- As the chart shows, after hours the market started moving up to celebrate. After all, this market is driven by government spending and Fed money printing.
- First GOP leader Mc Carthy managed to temporarily delay the vote by speaking for over eight hours.
- Stock futures kept on rising as investors knew that McCarthy could not speak forever.
- The big jump in SPY shows SPY catching up with futures to celebrate.
- Then came the news that Austria will lockdown and mandate compulsory vaccinations. Austria is a small country but investors started contemplating the possibility of Germany also locking down as the virus spreads.
- The chart shows the deterioration in SPY as the news from Austria spread.
- Travel stocks are being crushed.
- Of special interest is that the momo crowd is aggressively buying tech stocks and other momo stocks. The thinking is that the virus is good for momo stocks. Tech stocks and momo stocks are very sensitive to Fed policy. If the virus spreads, it will give the Fed an excuse to continue pumping air into the stock market.
- The VUD indicator is the most sensitive measure of net supply demand in real-time. The orange represents net supply and the green represents net demand.
- The VUD indicator is mixed as smart money is selling on the virus news on concerns that this may lead to stagflation but momo is buying stocks on the potential of a slower taper due to the virus spreading.
- It is option expiration day. In tech and momo stocks option expiration appears to be on the upside.
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
Oil fell on reduced travel due to the virus spreading.
The momo crowd is 🔒 oil in the early trade taking advantage of the dip. 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 on the virus spreading.
The dollar is stronger on virus spreading.
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 $1860, silver futures are at $24.81, and oil futures are at $76.21.
S&P 500 futures resistance levels are 4713, 4773, and 4900: support levels are 4600, 4460, and 4400.
DJIA futures are down 64 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.
WHAT INFLATION? LOWER FOR LONGER BELIEF STRENGTHENS
To gain an edge, this is what you need to know today.
Lower For Longer
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 shows that the market is continuing to levitate.
- Give it to the momo gurus — the new belief is that inflation does not matter.
- Why doesn’t inflation matter? The belief is strengthening that irrespective of inflation, the Fed will keep interest rates lower for longer.
- The Fed policy is one of the primary drivers of this stock market. Based on lower for longer, aggressive buying is coming into tech stocks. Tesh stocks are very interest rate sensitive.
Jobless Claims
Initial Claims came at 268K vs, 260K consensus.
Momo Crowd And Smart Money In Stocks
The momo crowd is 🔒 stocks in the early trade. Smart money is 🔒.
Gold
The momo crowd is 🔒. Smart money is 🔒.
For longer-term, please see gold and silver ratings.
Oil
There is a report that Biden is asking India and China to release from their SPRs.
Previously OPEC+ rejected Biden’s demand to increase production.
Ironically, Biden’s policies have reduced production in the United States.
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 $1867, silver futures are at $25.06, and oil futures are at $77.70.
S&P 500 futures resistance levels are 4713, 4773, and 4900: support levels are 4600, 4460, and 4400.
DJIA futures are up 33 points.
BIDEN FED ANNOUNCEMENT IMMINENT — POURING GASOLINE ON THE FIRE
To gain an edge, this is what you need to know today.
Pouring Gasoline On The Fire
Please click here for a chart of the Fed balance sheet.
Note the following:
- The chart shows that Powell’s idea of fighting inflation is to keep on printing more money but at a lesser rate while keeping Fed’s interest rate near zero.
- The Fed’s policy is like pouring gasoline on the fire of inflation.
- Biden is set to announce his pick for the next Fed chair. The speculation is that Biden will pick between Powell and Lael Brainard.
- Brainard is more dovish than Powell.
- The momo crowd is hoping for Brainard because she will pour more gasoline on the fire compared to Powell.
- Momo believes that a Brainard appointment will run up the stock market further.
Housing
Housing Starts came at 1.52M vs. 1.59M consensus.
Building Permits came at 1.65M vs. 1.64M consensus.
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 came at an inventory build of 655K barrels vs. a consensus of 1.55M barrels.
The concern is that Biden will release oil from SPR.
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 range-bound.
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 $1863, silver futures are at $25.16, and oil futures are at $79.67.
S&P 500 futures resistance levels are 4713 and 4900: support levels are 4600, 4460, and 4400.
DJIA futures are down 53 points.
CONSUMER BUYING BINGE CONTINUES
To gain an edge, this is what you need to know today.
Buying Binge
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 shows the stock market is hovering near the channel low band.
- The chart shows that the market is no longer overbought.
- Investors need to pay attention to consumer behavior because the U. S. economy is 70% consumer-based.
- The consumer buying binge continues for the time being even though consumers have a lot of apprehensions about inflation. Consumers are willing to pay higher prices.
- October Retail Sales came at 1.7% vs. 1.2% consensus.
Retail Sales Ex-auto came at 1.7% vs. 0.9% consensus.
Rents Surge
Rents for single-family homes surged 10.2% in September year over year. This is clear evidence that the Fed’s policies are beginning to hurt working people. The Fed uses the ruse of helping the low-income people to justify its money printing and zero interest rates.
Bitcoin
Bitcoin is selling off as Marathon Digital (MARA) received a subpoena for violations of securities laws.
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
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 $1873, silver futures are at $25.35, and oil futures are at $81.34.
S&P 500 futures resistance levels are 4713 and 4900: support levels are 4600, 4460, and 4400.
DJIA futures are up 51 points.
NEGATIVE REAL YIELD DRIVING STOCKS HIGHER
To gain an edge, this is what you need to know today.
Negative Yield
Please click here for inflation-adjusted Treasury real yield.
Note the following:
- The chart shows that the real yield on the 10-year Treasury has become more negative in recent days.
- The real yield is negative due to the stampede into Treasury Inflation Protected Securities (TIPS). We are receiving a large number of questions from investors regarding investing in TIPS. In due course, we are planning a podcast on TIPS. This will be available to Arora Ambassador Club members.
- Paradoxically, the negative real yield is driving the stock market higher.
- Over the weekend, there has been a big pump about the stock market in social media.
- Many retail investors appear to be rushing to buy stocks this morning based on the social media pump.
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
WTI crude has fallen below $80.
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 a .nd 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 $1865, silver futures are at $25.06, and oil futures are at $79.69.
S&P 500 futures resistance levels are 4713 and 4900: support levels are 4600, 4460, and 4400.
DJIA futures are up 126 points.
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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.
