By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
Momo Crowd Buys Shallow Dip
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 reaction to the U.S. bombing Iran is muted.
- RSI on the chart shows the stock market is neither overbought nor oversold and can go in either direction.
- On Sunday evening when stock futures opened, they opened lower about 1%. The momo crowd immediately bounced to buy the shallow dip. The momo crowd has continued to buy stocks as of this writing.
- There is no smart money buying as of this writing in the premarket. Presumably, the reason is smart money wants to know how Iran will respond. In contrast, the momo crowd has already concluded that Iran is a paper tiger.
- Iran has many options. It will be total arrogance for anyone to believe they know how Iran is going to react. Prudent investors should start from Arora’s Second Law of Investing and Trading, which states “Nobody knows with certainty what is going to happen next in the markets,” and Arora’s Third Law, which states “Making investing and trading decision based on probabilities is the only realistic and profitable approach.”
- As a member of The Arora Report, you have been ahead of the curve. The highest probability scenario continues to be what we shared with you on June 17:
This morning, at a time when selling is taking place in stocks on heightened concern about the Israel Iran war, in The Arora Report analysis, the highest probability scenario is Iran capitulation on its ambitions to build a nuclear weapon. If this highest probability scenario comes true, investors should look ahead to the following:
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Israeli stocks will go up. There is a new buy signal on Israel ETF EIS in ZYX Allocation.
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Defense stocks will go down.
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Oil stocks will go down
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Oil will go down.
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Such a development will be negative for gold but expect central banks to buy the dip.
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Such a development will be negative for silver. The likely Arora call will be to start a trade around position in silver.
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Such a development will be negative for the Chinese stock market.
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Such a development will be negative for Russia.
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Such a development will be negative for U.S. Treasuries. For those wanting next level information, listen to the new podcast titled “GET AHEAD OF THE CURVE – CRACKS APPEAR IN AMERICAN EXCEPTIONALISM” in Arora Ambassador Club.
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Such a development will be positive for the Taiwanese stock market.
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Such a development will be positive for the U.S. stock market.
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Such a development will be positive for the Indian stock market.
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Such a development will be positive for European stock markets.
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Such a development will be positive for the U.S. dollar.
- There is no value to be added by regurgitating everything that is in mainstream media. Prudent investors should pay attention to a statement coming from Russia that the media has ignored. Deputy Chairman of the Security Council of Russia Dmitry Medvedev said, “A number of countries are ready to directly supply Iran with their own nuclear warheads.” In The Arora Report analysis, the only four countries that are even plausible are Russia, North Korea, China, and Pakistan.
- Prudent investors should also pay attention to the fact that it appears 400kg of Iran’s enriched uranium is missing. This is enough to make ten nuclear bombs. It is likely that Iran moved this uranium to a secure secret location before the attacks.
- Investors should think in different time frames. Even if Iran does not respond vigorously, in the short term, Iran may secretly build a nuclear weapon over the next year, unless there is a regime change.
- Prudent investors should also note that Iran’s parliament has passed a resolution calling for the blockage of the Strait of Hormuz. About 25% of the world’s oil is transported through the Strait of Hormuz.
- For investors who want next level information, there is a new podcast in Arora Ambassador Club titled “GREAT OPPORTUNITIES AND PERILS FOR INVESTORS FROM U.S. BOMBING IRAN.”
- 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 Apple (AAPL), Amazon (AMZN), Meta (META), and Tesla (TSLA).
In the early trade, money flows are neutral in Microsoft (MSFT) and Alphabet (GOOG).
In the early trade, money flows are negative in Nvidia (NVDA).
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. 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 *** in 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
Bitcoin (BTC.USD) is seeing selling on Iran risk. The price action in bitcoin goes against the narrative of bitcoin promoters that bitcoin is a hedge against geopolitics.
Markets
Interest rates are ticking down, and bonds are ticking up.
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, 6256, and 6500: support levels are 5926, 5748, and 5622.
DJIA futures are up 30 points.
Gold futures are at $3383, silver futures are at $35.98, and oil futures are at $74.39.
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.
