CONSUMER CONFIDENCE FALLS – SMART MONEY REACTS BY SELLING STOCKS

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

Consumer Confidence

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

Note the following:

• From the Interim Capsule published earlier to give you an edge:

In the Morning Capsule, we shared with you that the momo crowd was aggressively buying but their reason to buy was flawed.  The momo crowd buying became even more aggressive at the market open.

Smart money first started selling lightly into the strength but then became more aggressive with selling.  NASDAQ 100 has pulled back about 3% from today’s high.

Momo crowd is still buying and smart money selling has slowed down as of this writing.  However significant technical damage has been done.  Unless the market moves up, this will be an outside key reversal day.  This is a negative pattern in traditional technical analysis.

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• The chart shows when Consumer Confidence data was released. Here are the details:
  •  The Consumer Confidence came at 98.7 vs. 101.0 consensus.
  • The prior data was revised to 103.2 from 106.4.
• There is quite a contrast between how the momo crowd and smart money reacted to the data.
  • Smart money is concerned not only about a recession but also long term stagflation.  Smart money took advantage of the strength created by the momo crowd and aggressively sold stocks.
  • Momo crowd gurus like the weak data.  Their reasoning is that this will force the Fed to stop fighting inflation.  The momo crowd aggressively bought after release of the data.
• The 7-year Treasury auction was less than stellar. Here are the details:
  • $40B 7-year Treasury auction
  • High yield: 3.280% (When-Issued: 3.259%)
  • Bid-to-cover: 2.48
  • Indirect bid: 61.9%
  • Direct bid: 20.4%
• The chart shows when the Treasury auction results were announced.  The chart shows the results brought in more selling.
• 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 is solid orange, indicating significant net supply of stocks.

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

There appear to be 🔒 on close orders.

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.

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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.