By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
Bitcoin Breaks Out
Please click here for a chart of bitcoin futures (BRR_F).
Note the following:
- The chart shows bitcoin broke out.
- RSI on the chart shows bitcoin has room to run. The severely overbought condition in bitcoin has been relieved by bitcoin being range bound for a few days.
- There is no resistance for bitcoin between here and $65,000.
- The rise in bitcoin seems to be triggered, in part, by a rumor that Microsoft (MSFT) will start supporting bitcoin in its products. In The Arora Report analysis, at this time, there is no credibility to this rumor. More than likely, it is simply another tool used by whales to drive bitcoin higher. Having said that, stranger things have happened.
- Upcoming halving is also contributing to buying in bitcoin.
- The sharp rise in bitcoin is an indication of overall extreme positive sentiment in the market.
- The momentum in bitcoin could slow or even reverse if the market starts paying attention to anything other than momentum and AI.
- Bitcoin whales get investors excited about buying bitcoin, then whales tactically sell into the strength without slowing the rise. If momentum reverses, then whales sell aggressively.
- Bitcoin miners are being aggressively bought. This is a leading indicator.
- The only realistic way to generate high risk adjusted returns from bitcoin is to understand bitcoin whales and their secrets. The Arora Report is sharing bitcoin whales’ secrets in the three-part series “Whales’ Secrets You Need To Know: Capturing Bitcoin Profits.” If you are interested in access to the three-part series, please fill out the form by clicking here.
- In The Arora Report analysis, the just released durable goods data shows weakening business spending. Here are the details:
- Headline durable orders came at -6.1% vs. -4.4% consensus.
- Durable orders ex-transportation came at -0.3% vs. 0.3% consensus.
- Durable goods is a volatile series but worth watching. In The Arora Report analysis, if durable orders continue to weaken, this will argue against the prevailing consensus of no landing.
- Consumer confidence will be released at 10am ET. Usually, consumer confidence is market moving. However, today it may not, due to the AI frenzy.
- The Treasury will be auctioning seven year notes today. Investors will be carefully watching the auction results. More important will be how the stock market reacts if the auction is not well received. If the stock market moves based on the auction results, that will be an indication that the AI frenzy might be cooling.
- Month end window dressing is taking place. It is primarily leading to money managers buying AI stocks.
- As an actionable item, the sum total of the foregoing is in the protection band, which strikes the optimum balance between various crosscurrents. Please scroll down to see the protection band.
Layoffs
Sony (SONY) is laying off 8% of workers in its PlayStation division.
Expedia (EXPE) is laying off 1,500 workers.
Home Prices
Home prices continue to be strong. Case-Shiller Home Price Index came at 6.1% vs. 6.0% consensus.
Magnificent Seven Money Flows
In the early trade, money flows are positive in Alphabet (GOOG) and Tesla (TSLA).
In the early trade, money flows are neutral in Apple (AAPL), Amazon (AMZN), Meta (META), and Microsoft (MSFT).
In the early trade, money flows are negative in Nvidia (NVDA).
In the early trade, money flows are mixed in S&P 500 ETF (SPY) and 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) stocks in the early trade. Smart money is *** in the early trade.
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
The momo crowd is *** oil in the early trade. Smart money is *** in the early trade.
For longer-term, please see oil ratings.
Bitcoin
Bitcoin (BTC.USD) is breaking out. For details see above.
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 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 $2045, silver futures are at $22.66, and oil futures are at $77.57.
S&P 500 futures are trading at 5087 as of this writing. S&P 500 futures resistance levels are 5210, 5400, and 5500 : support levels are 5020, 4918, and 4852.
DJIA futures are down 18 points.
Protection Band And What To Do Now
It is important for investors to look ahead and not in the rearview mirror.
Consider continuing to hold good, very long term, existing positions. Based on individual risk preference, consider holding *** in cash or Treasury bills 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.
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 seven 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.
