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.’
SELLING ON LOCKDOWN IN HONG KONG — MARKET CARES ABOUT VIRUS IN CHINA
To gain an edge, this is what you need to know today.
Market Cares About Virus In China
Please click here for a chart of Nasdaq futures (NQ_F).
Note the following:
- Yesterday Biden warned that the U. S. deaths will hit 500,000 next month. What did the momo crowd do in response to Biden’s warning? The momo aggressively bought.
- The worse the damage from the virus gets, the more aggressive momo gets in buying stocks. The reason is that the more damage, the more the borrowing and money printing. This stock market bubble is being inflated by excessive borrowing and excessive money printing.
- The market treats the virus in China differently than in the U. S. and Europe. The reason is that China does not respond to the virus spread with money printing and borrowing. China responds to the virus with lockdowns to control the virus. Lockdowns hurt economic activity.
- There has been persistent selling in the futures as shown on the chart due to the lockdown of 150 residential buildings in Hong Kong.
- Less informed gurus in the U. S. media is blaming the selling on earnings report from IBM, and INTC. However, note that a major broker has raised the target on INTC after the earnings. IBM and INTC are facing their own unique issues that do not apply to other companies.
- INTC has only 2.035% weight in Nasdaq 100 and IBM is not even in the Nasdaq 100. This is the reason the chart of NQ_F is being used to illustrate the point. The ETF of interest is QQQ.
- 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 VUD indicator shows that the momo crowd is buying the dip.
Emulate Smart Money
Investors may consider emulating smart money. We shared with you yesterday that smart money was selling into the strength. Today the market is lower and there is no smart money selling.
Bitcoin
Bitcoin dipped below $30,000 before bouncing. MSTR bought 314 bitcoins at the price of $31,808 per bitcoin.
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 🔒.
Gold
The momo crowd is 🔒 gold and moving money into bitcoin 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 1843, silver futures are at $25.31, and oil futures are $51.70.
S&P 500 futures resistance levels are 3860 and 4000: support levels are 3800, 3630 and 3600.
DJIA futures are down 215 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, on dips, 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, 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.
BIDEN’S FIRST DAY SHOWS EXTREME IMPORTANCE OF FOLLOWING THE TECHNICALS
To gain an edge, this is what you need to know today.
Extreme Importance
Please click here for a chart of Google (GOOG)
Note the following:
- The Morning Capsule covers the big picture.
- The Morning Capsule is not about individual stocks.
- The purpose of the Google chart is to help investors understand an extremely important point — right now investors need to pay attention to technicals over everything else.
- Democrats have done a significant amount of work building an anti-trust case against Google.
- Biden administration is expected to be harsh against Google.
- For the foregoing reasons, on a fundamental basis, the expectations have been for GOOG stock to perform poorly under the Biden administration.
- What did GOOG stock do on Biden’s first day?
- The chart shows the stock opened with a small gap up on Biden’s first day.
- The chart shows that the stock moved up strongly after the open.
- The chart shows that GOOG stock experienced a decisive breakout to the upside on Biden’s first day.
- This breakout is totally contrary to expectations based on fundamentals.
- Now that the stock has broken out, gurus are out in full force to explain the breakout after the fact. The explanation is that as people get an additional $1400 check, advertisers will advertise more to capture a share of the money that consumers will be receiving. The more money flooding the system because of excessive borrowing and excessive printing will lead to more advertising. For example, stockbrokers will increase their advertising to capture a share of the $1400 checks.
- Patterns similar to Google have emerged in several stocks on Biden’s first day.
- The foregoing illustrates the extreme importance of paying attention to technicals at this time.
Blowout Housing Starts
Everyone knew that the housing market is hot but no one expected it to be this hot. This morning is bringing blowout numbers on housing.
December Housing Starts came at 1.669M vs. 1.56M consensus.
December Building Permits came at 1.709M vs. 1.6M consensus.
Jobless Claims
Initial Claims came at 900K vs. 845K consensus.
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 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 $1864, silver futures are at $25.85, and oil futures are $53.04.
S&P 500 futures resistance levels are 3860 and4000: support levels are 3800, 3630 and 3600.
DJIA futures are up 12 points.
BUYING ON EXCITEMENT ABOUT BIDEN UNDOING TRUMP LEGACY — TWIN CAUTIONS
To gain an edge, this is what you need to know today.
Twin Cautions
Please click here for a chart of Gevo (GEVO).
Note the following:
- Prudent investors should observe two cautions.
- The momo crowd is aggressively buying as they are excited about Biden using executive orders to undo a large part of Trump’s legacy.
- The momo crowd has a short memory. Not long ago, the momo crowd was buying aggressively on Trump’s every word. The momo loved Trump. Now the momo loves Biden.
- Do you see the dichotomy? The momo crowd, the gurus and the media do not see one.
- It is important to focus on the real reasons behind the bubble getting bigger — excessive money printing and excessive borrowing.
- The Morning Capsule is about giving you the big picture. The chart of GEVO is not about GEVO but to illustrate the second caution.
- GEVO is a biofuel company with a fair value of less than $1.
- The chart shows that the stock was pumped using a misleading claim that Bill Gates was investing.
- The chart shows with the rectangle on the left-hand side the pump. The pump ran the stock up to over $11.60.
- The chart shows with a rectangle the zone where the sheep were sucked in at the top.
- The company took advantage of the pump to announce a direct offering.
- The direct offering was conducted at $8 — a steep discount to the market price of over $11.
- The pumpers kept the sheep from selling by spreading the falsehood to the sheep that the news was wrong and it was about an old shelf and no stock was being sold.
- The chart shows with a rectangle the lie.
- The chart shows with a rectangle the dump.
- The same pattern was followed with the lithium company LAC and the biotech BNGO. All of that and more in just one day.
- As tempting as it is for investors to experience FOMO (fear of missing out), it is better to have self-discipline.
- 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 VUD indicator tells the real story.
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 $1849, silver futures are at $25.43, and oil futures are $53.71.
S&P 500 futures resistance levels are 3860 and 4000: support levels are 3800, 3630 and 3600.
DJIA futures are up 109 points.
MOMO BUYS ON YELLEN’S CALL FOR ‘BIG’ ACTION
To gain an edge, this is what you need to know today.
‘Big’ Action
Please click here for a chart of S&P 500 ETF (SPY) which represents the benchmark for the stock market index (SPX).
Note the following:
- Yellen confirmation is starting in the Senate.
- Yellen is calling for ‘big’ action. In plain English, the call is to borrow to the hilt.
- The momo crowd is excited about the prospect of the government borrowing to the hilt. A large part of the borrowed money will likely flow into the stock market, Bitcoin and real estate pushing these assets higher.
- Any discussion of the long term negative effects of the heavy borrowing and how the money will be paid back is not a subject anybody wants to touch. It is like a party where everybody is too drunk to think about the ultimate hangover.
- The chart shows that in the premarket there is heavy buying on the excitement over the big action call.
- The price pattern shown on the chart is positive.
- RSI shown on the chart is tracing a positive pattern.
Sentiment In Europe
The new data shows that sentiment is becoming more positive in Europe. January ZEW Economic Sentiment came at 58.3 vs. 56.0 consensus.
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 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 $1838, silver futures are at $25.24, and oil futures are $52.48.
S&P 500 futures resistance levels are 3800, 3860 and 4000: support levels are 3630, 3600 and 3520.
DJIA futures are up 211 points.
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