WORST BOND ROUT IN 40 YEARS

To gain an edge, this is what you need to know now.

Bond Rout

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 first quarter of 2022 has seen the worst bond rout in 40 years.
The Arora Report has been ahead of the curve. We have been holding inverse bond ETF TBT that went up when bonds went down.
There are many cross-currents with the quarter ending.
- If it was not for buying of stocks due to rebalancing, the stock market would have been down much more than shown on the chart.
- Some window dressing by portfolio managers is still in progress. These portfolio managers are buying oil, gas, steel, copper, and agricultural stocks on the last day of the quarter.
- The momo crowd is buying because they believe that the dip is a buying opportunity.
- Smart money is lightly selling to protect against the risk evidenced by the yield curve.
The quarter just ending once again shows a sharp contrast between the smart money and the momo crowd.
- Smart money is more concerned about protecting what they have.
- Smart money gives precedence to the return of capital over the return on capital.
- Smart money invests with the objective of highest risk adjusted returns.
- The momo crowd does not take risk into account. They are mostly focused on buying.
- The momo crowd is driven by the recency bias. They do not think about the scenario in which the road ahead may be very different from the road behind.
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 chart shows that even though there is only a mild dip in the price, there is heavy net supply of stocks. There is only a mild dip in price because of aggressive buying by some institutions and the momo crowd.

Money Flows

The momo crowd money flows since the Morning Capsule are 🔒 (To see the locked content, please take a 30 day free trial).

Smart money flows since the Morning Capsule are 🔒.

Short squeeze money flows are 🔒.

A Special Note To New Subscribers

Note the smart money behavior. Smart money tends to sell into strength on strong up days.

New subscribers should consider adopting smart money’s way of investing and trading.

Sentiment

Sentiment is 🔒.

Sentiment is a contrary indicator at extremes. In plain English, this means that when sentiment becomes extremely positive it is time to sell and when sentiment becomes extremely negative it is time to buy.

Close

Orders on close are indeterminable due to quarter-end cross currents.

There is merit to watching the pattern of market on close orders as they represent the day’s dominant net cumulative activity by many professionals and funds.

Gold

The momo crowd money flows in gold are 🔒 since the Morning Capsule.

Smart money flows are 🔒 in gold since the Morning Capsule.

Oil

The momo crowd money flows in oil are 🔒 since the Morning Capsule.

Smart money flows in oil are 🔒 since the Morning Capsule.

Buy Zones And Buy Now Ratings

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Nibbling

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This post was published yesterday in The Arora Report paid services. Since then the Morning Capsule has had an update in the paid services.

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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.