By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
Trump Trade Rolls On
Please click here for a chart of bitcoin (BTC.USD).
Note the following:
- Our call on bitcoin has proven spot on. On Friday, we wrote:
Bitcoin (BTC.USD) is being bought on hope that whales will take advantage of low liquidity during the weekend to run bitcoin up over $80,000.
- The chart shows that bitcoin has moved to $81,866 as of this writing.
- RSI on the chart shows that bitcoin is overbought. However, in The Arora Report analysis, the RSI pattern shown on the chart is setting up for a higher bitcoin price, perhaps after a shallow pullback. The next target for bitcoin is $100,000.
- The chart shows the support zone for bitcoin.
- The chart shows that bitcoin broke out on Trump’s election. Trump has said he wants to be the crypto president. The Arora Report also gave a signal on Trump’s election to buy bitcoin via ETF IBIT. The trade is nicely profitable. Bitcoin is also in the ZYX Allocation Model Portfolio.
- Money is flowing out of gold and other commodities, such as oil, and into cryptos. For the first time iShares Bitcoin Trust (IBIT) has become bigger than iShares Gold Trust (IAU). On Trump’s election, a record $1.4B money inflow took place in IBIT.
- When looking at gold and bitcoin, investors need to understand that the gold market is not being manipulated, while bitcoin can easily be manipulated. Anytime an asset can be easily manipulated, it can be driven higher than you would think. Prudent investors who want to understand and make money in bitcoin may consider listening to the three part bitcoin series titled “Whales Secrets You Need To Know: Capturing Bitcoin Profits.”
- Other crypto tokens are also moving. Dogecoin, created as a joke, has gone up 40% since Friday. The meme crowd is going all in on smaller coins.
- Sentiment has reached the extreme zone. When sentiment reaches extreme positive, it is traditionally a sell signal. However, sentiment is not a precise timing signal. Also, this time is different because of the momentum from Trump’s election. The Arora Report’s sentiment indicator is a 360 degree view and is very comprehensive. Investors looking for a short cut may at this time look at bitcoin as an indication of sentiment.
- Investors need to understand that this is as pure of a momentum market as it gets. Momentum is great as long as it is going up. However, a break in momentum can cause major losses, especially in popular stocks. Those who want next level information may consider listening to the podcast that is in post production titled “Opportunities From Trump Hopium: Eight Insights.” The podcast will be available in Arora Ambassador Club.
- Based on the weekend pump, there is aggressive buying in stocks by retail investors in the early trade. Buying is extremely aggressive in Trump stocks, such as Tesla (TSLA). TSLA stock is up over 6% in the premarket, after moving up 8.2% on Friday. Tesla CEO Elon Musk is expected to be the most influential person in Trump’s administration, but without an official appointment.
- Trump’s election is impacting markets across the globe. Please see below for examples.
- 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.
China
There is disappointment in the markets about China’s stimulus.
China’s trade surplus is set to hit a record of almost $1T. Trump is likely to focus on this record.
India
The Reserve Bank of India is likely to let the Indian currency rupee weaken to compete with the Chinese yuan after Trump’s election.
Japan
The Bank of Japan failed to bolster the yen after Trump’s election. The yen has weakened.
Europe
There are reports that Trump and Putin have spoken in a bid to settle the Ukraine war. Russia is denying the report.
Magnificent Seven Money Flows
In the early trade, money flows are positive in Amazon (AMZN), Alphabet (GOOG), Nvidia (NVDA), and Tesla (TSLA).
In the early trade, money flows are neutral in Meta (META) and Microsoft (MSFT).
In the early trade, money flows are negative in Apple (AAPL).
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
Money is flowing out of gold and into cryptos.
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
Money is flowing out of oil and into cryptos.
The momo crowd is *** oil in the early trade. Smart money is *** in the early trade.
For longer-term, please see oil ratings.
Bitcoin
Please see above.
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 6043 as of this writing. S&P 500 futures resistance levels are 6131 and 6256: support levels are 6017, 5926, and 5748.
DJIA futures are up 166 points.
Gold futures are at $2644, silver futures are at $30.85, and oil futures are at $68.49.
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.
