By Nigam Arora
To gain an edge, this is what you need to know today.
China Warning
Please click here for a chart of gold futures (GC_F).
Note the following:
- The chart shows gold has moved up above $5000 again. The up move in gold is triggered by China’s warning. The same warning from China is hampering the budding stock market rally from oversold conditions.
- China is warning its financial institutions to reduce their holdings of U.S. Treasuries. China is also warning its financial institutions to limit purchase of new U.S. Treasuries.
- Chinese banks are large holders of U.S. Treasuries.
- China is being proactive to stop potential ire from President Trump. China is not framing this action as a loss of confidence in the U.S. but more of a diversification move.
- This is a major development prudent investors should pay attention to.
- Another major international development that prudent investors need to pay attention to is the historic election win of Prime Minister Takaichi in Japan. Her Liberal Democratic Party (LDP) has gained a supermajority in parliament. Takaichi’s win has major implications for investors.
- Stocks in Japan have risen on the win. Japan ETF (EWJ) is in the ZYX Allocation Core Model Portfolio. The position is very profitable.
- In The Arora Report analysis, any big dip in the Japanese stock market should be bought. There will be new signals in ZYX Allocation as appropriate.
- Takaichi’s win has a mixed impact on the carry trade. The carry trade is important because funds have borrowed hundreds of billions of dollars in Japan and invested it in U.S. securities, lately in AI stocks.
- Takaichi’s win brings Japan closer to the U.S.
- Takaichi is taking a stronger stand against China.
- Takaichi is taking a stand in favor of Taiwan.
- Takaichi is likely to spend more on defense, boosting defense stocks. Aerospace and defense ETF (ITA) as well as European defense ETF (EUAD) are in the ZYX Allocation Core Model Portfolio. Both positions are very profitable, and in due course, there will be new signals.
- Takaichi will visit the U.S. on March 19. Expect more details of the $550B planned Japanese investment in the U.S. as part of the trade deal. The details may move several stocks.
- In important news, the FDA is finally acting against copycat weight loss drug company Hims & Hers Health (HIMS). In response, HIMS has reversed itself. Novo Nordisk (NVO) is filing a lawsuit. Shares of NVO and Eli Lilly (LLY) stocks are rising. On Thursday, ZYX Buy gave a signal to buy NVO stock when it was at $44.12 when NVO stock had plunged on the news of HIMS selling its copycat pills for $49 and analysts were issuing sell signals. The contrary Arora Report buy signal was based on The Arora Report’s analysis that the FDA would act. That call has proven spot on. On Friday after hours, The Arora Report gave a signal to take partial profits on NVO stock around $50.61 when NVO stock jumped on the news of FDA action. The NVO trade illustrates how investors can profit when they get ahead of the curve. Getting ahead of the curve over a period of years adds up to significant additional wealth.
- 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
Most portfolios are now heavily concentrated in the Mag 7 stocks. For this reason, to get ahead and get an edge, investors need to dig below the surface of the Mag 7 stocks. It is equally important to rise above the noise of daily news on the Mag 7 stocks. The best way to get an edge, dig below the surface, and rise above the noise of the daily news is to pay attention to early money flows in the Mag 7 stocks on a daily basis. When there is significant news in the Mag 7 stocks that rises above the threshold of noise and impacts your entire portfolio, it is covered in the main section above.
In the early trade, money flows are positive in Microsoft (MSFT).
In the early trade, money flows are neutral in Apple (AAPL) and Meta (META).
In the early trade, money flows are negative in Amazon (AMZN), Alphabet (GOOG), Nvidia (NVDA), and Tesla (TSLA).
In the early trade, money flows are negative 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) in 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 aggressively buying gold ETF (GLD), silver ETF (SLV), gold miner ETF (GDX), and silver miner ETF (SIL).
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
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 the China warning.
Markets
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.
S&P 500 futures are trading at 6938 as of this writing. S&P 500 futures resistance levels are 7000, 7200, and 7500 : support levels are 6780, 6500, and 6256.
DJIA futures are down 80 points.
Gold futures are at $5031, silver futures are at $79.56, and oil futures are at $63.23.
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.
