By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
Buying Opportunity Ahead
Please click here for a chart of Mexico ETF (EWW).
Note the following:
- President-elect Trump is threatening to impose steep tariffs on Mexico and Canada using an executive order on his first day in office.
- Mexico’s president is responding by claiming that migrant caravans are no longer arriving at the U.S. border. She is also offering cooperation to stem the flow of drugs to the U.S.
- If negotiations with Mexico do not go well, stocks in Mexico will be decimated. That will likely be an opportunity for long-term investors to back up the truck and buy stocks in Mexico. The reason is that there are simply not enough people in the U.S. to support economic growth and on-shoring of all of the manufacturing from China.
- The chart shows Mexico ETF EWW is oversold. However, EWW can become more oversold.
- Mexico ETF EWW can easily fall to the top support zone shown on the chart.
- In The Arora Report analysis, the back up the truck buying opportunity will tentatively occur if Mexico ETF EWW falls to the lower support zone shown on the chart. However, this is all data dependent. Investors should carefully follow the data points.
- Investors need to look ahead and be prepared if the opportunity in Mexico arises. Mexico has been continuously covered in ZYX Emerging for 17 years. For those interested in this potential, back up the truck buying opportunity, stay tuned to the Real Time Feed of ZYX Emerging. In a buy signal, the support zone is only one of many factors. The algorithms used by The Arora Report are highly complex and combine the best elements of macro analysis, fundamental analysis, technical analysis, and quantitative analysis with an overlay of change. Identifying change early and being prepared to capture opportunity leads to big gains.
- Trump is also threatening Canada with steep tariffs. If Canadian stocks are decimated, there will be an opportunity to buy Canada ETF EWC. Again, investors need to be prepared ahead of time to capture the opportunity if it arises. A signal to buy Canadian stocks will be in ZYX Allocation.
- Yesterday evening, when the news broke of Trump’s tariff plan, stock futures were first quickly sold. Then, the momo crowd stepped in and has been aggressively buying the dip.
- There are important developments in bitcoin. Please scroll down to the bitcoin section below.
- 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. The protection band is one of the large number of unique edges that are available to members of The Arora Report.
Holiday Schedule
Happy Thanksgiving! Due to the holiday, our offices will be on a reduced schedule. The next Capsule will be on Monday.
Magnificent Seven Money Flows
In the early trade, money flows are positive in Amazon (AMZN), Meta (META), Tesla (TSLA), Apple (AAPL), and Nvidia (NVDA).
In the early trade, money flows are neutral in Alphabet (GOOG) and Microsoft (MSFT).
In the early trade, money flows are positive 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.
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.
Very Very Short-Term Indicator
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.
Gold
Gold is being bought on the tariff threat.
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 *** in oil in the early trade. Smart money is *** in the early trade.
For longer-term, please see oil ratings.
Bitcoin
At a time when almost everyone is bullish on bitcoin (BTC.USD) and cryptos, money flows are at a record to short bitcoin. As an example, money flows in ProShares UltraShort Bitcoin ETF (SBIT) were at a record $18.8M yesterday. Of course, money flows in short bets on bitcoin pale in comparison to money flows in long bets.
Bitcoin whales took profits in the zone of $93,000 – $98,000, taking advantage of super excited retail investors. At a time when retail investors were converting their dollars into bitcoins, bitcoin whales were converting their bitcoins into dollars. For those interested in next level information on a new emerging narrative, listen to the podcast titled “OUT OF THIS WORLD BITCOIN PLAN EMERGES” in Arora Ambassador Club. To get on the waitlist to join Arora Ambassador Club, please click here to fill out the form.
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 6023 as of this writing. S&P 500 futures resistance levels are 6131 and 6256: support levels are 5926, 5748, and 5622.
DJIA futures are down 114 points.
Gold futures are at $2628, silver futures are at $30.59, and oil futures are at $69.54.
Protection Band And What To Do Now
It is important for investors to look ahead and not in the rearview mirror. The proprietary protection band from The Arora Report is very popular. The 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.
