By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
Stock Market Magnet
Please click here for a chart of S&P 500 ETF (SPY) which represents the benchmark stock market index S&P 500 (SPX).
Note the following:
- The chart shows that the pull of zone 1 as the stock market’s magnet is very strong.
- The chart shows that RSI has now become barely overbought. This indicates that there is room for the stock market to move to zone 1, but the stock market can also pull back due to overbought conditions.
- Elon Musk is calling President Trump’s budget a “disgusting abomination.” Musk says, “Congress is making America bankrupt.” Musk claims that President Trump’s “One Big Beautiful Bill” will massively increase the budget deficit to $2.5T.
- The momo crowd buys Tesla (TSLA) stock on every comment from Musk. How is the momo crowd reacting to Musk’s comment about President Trump’s budget? The momo crowd is aggressively buying stocks as the pull of the zone 1 magnet in the stock market is much stronger than Musk’s influence.
- Prudent investors should pay attention to Musk’s comment about President Trump’s budget. After all, Musk spent $250M of his own money to get Trump elected and countless hours in Washington on DOGE to help President Trump.
- President Trump said, “I like President XI of China, always have, and always will, but he is VERY TOUGH, AND EXTREMELY HARD TO MAKE A DEAL WITH!!!”
- How does the momo crowd react to President Trump’s statement? The momo crowd is buying stocks because President Trump likes President Xi, and they are ignoring President Trump saying that President Xi is extremely hard to make a deal with.
- Prudent investors should not ignore half of President Trump’s statement.
- ADP is the largest private payroll processor in the country. ADP data poured cold water on all the bullishness. ADP showed employment much weaker than expected. ADP Employment Change came at 37K vs. 115K consensus.
- Weak ADP data brought quick selling to the stock market, but as of this writing, the momo crowd is aggressively buying the shallow dip caused by the ADP data.
- ADP data comes after JOLTS data. JOLTS came at 7.391M vs. 7.2M prior. JOLTS data contributed to yesterday’s stock market rally.
- Initial jobless claims will be released tomorrow at 8:30am ET and the official jobs report will be released Friday at 8:30am ET.
- ISM Services will be released today at 10am ET. Consensus is 52.0%. ISM Services data can cause major moves in the markets. ISM Services data is a leading indicator and carries heavy weight in the adaptive ZYX Asset Allocation Model with a long proven track record with inputs in 10 categories.
- The Fed’s Beige Book will be released today at 2pm ET and may be market moving.
- There has been significant Fed speak:
- Dallas Fed President Logan said the Fed should focus on forward looking policy that is prepared for a high inflation era.
- Fed Governor Cook warned of increasing uncertainty with trade policy potentially pressuring inflation and jobs.
- Atlanta Fed President Bostic indicated room for one rate cut in 2025.
- For the AI trade, earnings from Broadcom (AVGO) are important. Earnings will be released after market close.
- Also important are earnings from Lululemon (LULU) as it will give a glimpse into the state of the higher end consumer as well as lower end consumers who purchase Lululemon as a status symbol.
- 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
In the early trade, money flows are positive in Meta (META) and Nvidia (NVDA).
In the early trade, money flows are neutral in Amazon (AMZN), Alphabet (GOOG), Microsoft (MSFT), and TSLA.
In the early trade, money flows are negative in Apple (AAPL).
In the early trade, money flows are like a yoyo 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) 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 *** but can turn *** on rumors about President Trump’s call with President Xi. 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 *** in gold in the early trade. Smart money is *** in the early trade.
For longer-term, please see gold and silver ratings.
Oil
API crude inventories came at a draw of 3.3M barrels vs. a consensus of a draw of 0.9M barrels. This data is bearish for oil, but new politics will trump any data.
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 range bound.
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 5976 as of this writing. S&P 500 futures resistance levels are 6017, 6131, and 6256: support levels are 5926, 5748, and 5622.
DJIA futures are down 10 points.
Gold futures are at $3372, silver futures are at $34.47, and oil futures are at $63.37.
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.
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.
