CONSUMER BUYING BINGE GOES IN HIGH GEAR, THE HOLY GRAIL OF BITCOIN

By Nigam Arora & Dr. Natasha Arora

Weekly Digest from The Arora Report is popular among serious investors and money managers because they have found studying insights from the prior week gives them an edge over the coming weeks. Here is the day by day rundown from the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers of The Arora Report

Please scroll down for the section ‘Protection Bands and What To Do Now.’

CONSUMER BUYING BINGE GOES IN HIGH GEAR, THE HOLY GRAIL OF BITCOIN

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

Consumer Buying Binge

Please click here for a chart of  S&P 500 ETF () which represents the benchmark stock market index S&P 500 ().

Note the following:

  • The U. S. economy is 70% consumer-based. Therefore it is important to keep an eye on consumer behavior. Here are the key points.
    • Since the government started sending free money last year, the consumer has been on a buying binge.
    • The biggest beneficiary has been China since the majority of the items consumers are buying are being imported from China. We previously shared with you that in the month of September, the largest one-month wealth transfer took place from the U. S. to China.
    • The expectations were that the consumer buying binge would slow.
    • September Retail Sales came at +0.7% vs. -0.3% consensus.
    • The prior month’s sales were revised to 0.9% from 0.7%.
    • September Retail Sales Ex-auto came at 0.8% vs. 0.4% consensus.
    • The prior month’s Ex-auto sales were revised to 2.6% from 1.8%.
  • The chart shows the rally has put the market back into the resistance zone after successfully testing the support zone.
  • The chart shows the rally is continuing in the premarket.
  • The chart shows that the big rally yesterday was on low volume indicating a lack of conviction.
  • The chart shows that RSI just became overbought but can go higher.

The Holy Grail Of Bitcoin

Since 2013, the Holy Grail of bitcoin has been a bitcoin ETF.  The concept is that an ETF will make it easier for investors to buy bitcoin.  There is a report that the SEC is close to approving two bitcoin futures ETFs.

India

The coal crisis in India is worsening.  Coal India is the largest coal miner in the world.  It has suspended shipments to industrial users to help power plants that are running out of coal.

In the meanwhile, the Indian stock market is closed for the festival of Dussehra.  The Indian stock market has hit record highs as foreign money continues to flow out of China and into India.

Indonesia

The foreign money fleeing China is also pouring into Indonesia.

Momo Crowd And Smart Money In Stocks

The momo crowd is 🔒 (To see the locked content, please take a 30 day free trial)  in the early trade.  Smart money is 🔒.  Keep in mind that smart money holds very large positions in stocks.  Smart money appears to be adjusting on the margins.

This is similar to the trade around positions we advocate. Please Trade Management Guidelines.

Gold

There is significant selling in gold on the prospect of bitcoin ETFs.  The concept is that if it becomes easier to invest in bitcoin, more investors will buy bitcoin instead of gold.

Gold took a second leg down on stronger than expected retail sales. The concept is with consumer buying binge going into high gear, there is no need for the safety of gold.

On the positive side, demand for physical gold in India is spiking up ahead of the Diwali festival.

The momo crowd is s🔒 gold in the early trade. Smart money is 🔒.

For longer-term, please see gold and silver ratings.

Oil

The momo crowd is 🔒 oil in the early trade.  Smart money is 🔒.

For longer-term, please see oil ratings.

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 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.

Gold futures are at $1770, silver futures are at $23.25, and oil futures are at $81.82.

S&P 500 futures resistance levels are 4460, 4600, and 4900: support levels are 4400, 4318, and 4200.

DJIA futures are up 246 points.

Protection Bands and What To Do Now?

It is important for investors to look ahead and not in the rearview mirror.

Consider continuing to hold existing positions. Based on individual risk preference, consider holding 🔒 in cash or treasury bills or short-term bond funds 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.

BUYING ON JOBLESS CLAIMS HITTING PRE-PANDEMIC LEVEL AND GOOD EARNINGS

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

Good Earnings

Please click here for a chart of Taiwan Semiconductor ().

Note the following:

  • The Morning Capsule is about the big picture and not about individual stocks. The chart of an individual stock is used when it is having a significant impact on the overall market or it illustrates a bigger point.
  •  although not an American company is the biggest semiconductor foundry in the world.
  • TSM is the foundry of choice for sophisticated chips such as those that go in the iPhone.
  • Semiconductors are a leading sector and have lately been pulling back. For this reason, earnings from TSM are a major milestone.
  • TSM earnings are better than expected.  This is generating positive sentiment.
  • The chart shows that in the premarket, TSM stock is breaking above the support zone.
  • TSM stock is in ZYX Buy Core Model Portfolio and has been in the buy zone.
  • Earnings released this morning are better than expected.  This is adding buying pressure to the stock market. In addition to TSM, other earnings of note are , and .

Jobless Claims

Jobless Claims are hitting the pre-pandemic level.  Jobless Claims came at 293K vs. 332K consensus.  This is proof positive that many people were not coming back to work because the government had granted them unemployment benefits more than what they were making.  Now the ill-designed program has ended.  The government borrowed heavily to finance that program.  The Federal Reserve in turn justified its excessive money printing based on people not coming back to work.  So much for the wisdom of our leaders.

Producer Price Index

PPI came at 0.5% vs. 0.6% consensus.

Core PPI came at 0.2% vs. 0.5% consensus.

Year over year PPI rose 8.6% vs. 8.7% consensus.

PPI is rising faster than CPI. This indicates that companies are not passing on all of the costs to consumers.  The importance of this for investors is that this will negatively impact the margins of several companies that are yet to report earnings.

Momo Crowd And Smart Money In Stocks

The momo crowd is 🔒 stocks in the early trade.  Smart money is selectively🔒.

Gold

The momo crowd is 🔒gold in the early trade. Smart money is 🔒.

For longer-term, please see gold and silver ratings.

Oil

API inventory showed a build of 5.213M barrels vs. a consensus of 140K barrels build.

The momo crowd is 🔒 oil in the early trade.  Smart money is 🔒 oil in the early trade.

For longer-term, please see oil ratings.

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 are ticking down and bonds are ticking up.

The dollar is weaker.

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 $1798, silver futures are at $23.34, and oil futures are $81.22.

S&P 500 futures resistance levels are 4400, 4460 and 4600: support levels are 4318, 4200 and 4000.

DJIA futures are up 325 points.

INFLATION BEATS FORECASTS – NEITHER BULLS NOR BEARS GOT WHAT THEY WANTED

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

Inflation

Please click here for a chart of  Nasdaq 100 ETF ().

Note the following:

  • CPI came at 0.4% vs. 0.3% for September.
  • CPI year-over-year rose 5.4% vs. 5.3% consensus.
  • The index for food at home jumped 1.2% in September – this is showing inflationary pressures.
  • Core CPI came at 0.2% vs. 0.3% consensus.
  • The chart shows momo crowd buying ahead of the number as is their pattern because they always believe that the market will go up.
  • Among non-momo investors, neither bulls nor bears got what they wanted. Bulls were expecting inflation to slow down but it did not happen. Bears were expecting inflation to be significantly worse than the consensus but that did not happen either.
  • There is a moment of indecision among non-momo investors. Such indecision typically pushes the market higher. The reason is that non-momo investors pull back to evaluate and no counterbalance is left to the momo buying.
  • The chart shows the indecision.
  • 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 as of this writing there is a small net supply of stocks.
  • As the day progresses, a consensus may develop about the CPI numbers released this morning.  This could change with news.

China Benefits From American Buying Binge

China is benefiting from American consumers’ buying binge.

  • Chinese exports surged 28.1% year on year in September to $305.74 billion vs. $21% consensus.
  • Chinese imports rose 17.6% to $240 billion vs. 20% consensus.
  • China’s trade surplus with the U. S. rose to a monthly record of $42 billion.
  • This is the largest transfer of wealth from the United States to China in one month.
  • China is the biggest beneficiary of the U. S. government borrowing and Fed money printing.

Earnings

Earnings season has started. So far , and  have reported this morning. Overall these three earnings are mixed.

Momo Crowd And Smart Money In Stocks

The momo crowd is 🔒 stocks in the early trade.  Smart money is 🔒.

Gold

The momo crowd is 🔒 gold in the early trade. Smart money is 🔒.

For longer-term, please see gold and silver ratings.

Oil

The momo crowd is 🔒 oil in the early trade.  Smart money is 🔒.

For longer-term, please see oil ratings.

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 weaker.

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 $1767, silver futures are at $22.82, and oil futures are at $80.02.

S&P 500 futures resistance levels are 4400, 4460, and 4600: support levels are 4318, 4200, and 4000.

DJIA futures are up 27 points.

EARNINGS SEASON STARTING WITH HIGH EXPECTATIONS

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

Earnings Season And Economic Data

Please click here for a chart of  S&P 500 ETF () which represents the benchmark stock market index S&P 500 ().

Note the following:

  • Earnings season is starting with high expectations.
  • Analysts have been increasing their estimates.
  • Whisper numbers have been going higher.
  • There are two schools of thought.
    • The first school of thought is that consumers are on a buying binge and this will help companies meet or exceed higher estimates. Most stock market analysts and strategists are in this school.
    • A minority is paying attention to consumer sentiment data and high-frequency data. This data indicates that the consumer buying binge is slowing. This school of thought is that earnings will disappoint.
  • More important than the earnings is what companies say about the future.  Typically companies tend to be bullish because they want their stocks to go up.
  • Important economic data is ahead.
    • CPI is on October 13.
    • PPI is on October 14.
    • Retail Sales and Univerity of Michigan Consumer Sentiment are on October 15.

Momo Crowd And Smart Money In Stocks

The momo crowd is 🔒 stocks in the early trade.  Smart money is🔒.

Gold

The momo crowd is 🔒 gold in the early trade.  Smart money is🔒.

For longer-term, please see gold and silver ratings.

Oil

The momo crowd is🔒 oil in the early trade.  Smart money is 🔒.

For longer-term, please see oil ratings.

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 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.

Gold futures are at $1756, silver futures are at $22.51, and oil futures are $80.36.

S&P 500 futures resistance levels are 4400, 4460, and 4600: support levels are 4318, 4200, and 4000.

DJIA futures are up 68 points.

INTEREST RATES RISE ON CONCERNS THE FED HAS BEEN WRONG

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

Interest Rates Rise

Please click here for a chart of  7 – 10 year Treasury bond ETF ().

Note the following:

  • The yield on 10-year Treasuries reached 1.613% on Friday.
  • Bonds move inverse to interest rates.
  • The chart is of ETF  as many investors find it easier to watch this ETF.
  • The chart shows that the ETF IEF is at the top band of the support zone.
  • Interest rates have been rising because the bond market knows that the Fed has been wrong on inflation.
  • Earlier in the morning, stock futures were falling and significant selling was coming into the stock market on concerns that the Fed has been wrong and may be boxed.
  • As the morning has progressed, the momo crowd bought the slightest dip and is continuing to buy as of this writing.

Chinese Tech Equities

The momo crowd is also buying Chinese tech stocks. The trigger is that China fined the food delivery company Meituan less than expected on antitrust issues. The fine was 3% of sales compared to the 4% previously levied on .

Coal Futures Reach A Record

In China, coal futures reached a record high. In some places in China, electricity is being rationed due to coal shortages.

India is running out of coal to power its electric plants.

Europe is having a severe natural gas shortage.

All of the foregoing is spilling into higher oil prices. Oil is being substituted for other fuels.

The concern is that fuel shortages will increase inflation and reduce global growth.

Momo Crowd And Smart Money In Stocks

The momo crowd is 🔒 stocks in the early trade.  Smart money is 🔒.

Gold

The momo crowd is 🔒 gold in the early trade. Smart money is 🔒.

For longer-term, please see gold and silver ratings.

Oil

The momo crowd is 🔒 oil in the early trade.  Smart money is 🔒.

For longer-term, please see oil ratings.

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 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.

Gold futures are at $1752, silver futures are at $22.50, and oil futures are $80.86.

S&P 500 futures resistance levels are 4400, 4460, and 4600: support levels are 4318, 4200, and 4000.

DJIA futures are down 26 points.

To take a free 30-day trial to paid services to gain access to more opportunities, please click here.

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Nigam Arora

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

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.

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