By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
Tougher Sanctions
Please click here for a chart of S&P 500 futures (ES_F).
Note the following:
- There was a rally in the stock market on Thursday and Friday last week on the following assumptions:
- Sanctions on Russia were weak.
- Russia would capture Kyiv quickly.
- Over the weekend, both assumptions turned out to be wrong.
- Tougher sanctions were imposed including the banning of certain Russian banks from the SWIFT banking system.
- Ukrainians have managed to hold on to Kyiv and other major cities.
- The chart shows a dramatic drop in stock futures when opened on Sunday.
- At one point Nasdaq futures were down over 3.2%.
- The chart shows that dip buyers have been stepping in and there has been steady buying.
- Russian central bank has raised its main rate to 20%.
- Russia has ordered its citizens and companies to not buy assets from foreigners.
- Sanctions are being imposed to prevent Russia’s central bank from using its foreign currency reserves.
- Putin has put Russia’s nuclear deterrence forces on alert.
- Talks are beginning between Ukraine and Russia. If the talks are successful, expect a strong rally.
- 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 there is net demand for stocks.
- Stock market bulls appear to be underestimating the risks.
- Prudent investors should consider paying attention to the protection bands.
Federal Reserve
The Federal Reserve may have to create more dollars to handle disruptions from sanctions.
In our analysis, the Fed will have a difficult time aggressively tightening the monetary policy due to the Russian situation. The stock market bulls may use this as a reason to buy stocks.
Powell will appear before the House on Wednesday and the Senate on Thursday. This may provide hints about the change in the Fed’s position due to the Russian situation.
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.
Gold
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 🔒 oil in the early trade. Smart money is 🔒 in the early trade.
For longer-term, please see oil ratings.
Bitcoin
Bitcoin is seeing buying on the speculation that Russia will use more cryptocurrencies after the new sanctions.
Markets
Our very, very short-term early stock market indicator is 🔒 as the market will depend on the news. 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 $1913, silver futures are at $24.56, and oil futures are $95.27.
S&P 500 futures resistance levels are 4318, 4400, and 4460: support levels are 4200, 4000, and 3950.
DJIA futures are down 459 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.
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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.
