By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
Dollar Strengthens
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 weakness in the dollar was one of the main reasons driving the U.S. stock market higher. Please click here to see the chart of dollar ETF UUP. For the sake of full transparency, this is exactly the same chart that was published in the Morning Capsule on November 11 without any changes. For details, please read the Morning Capsule from November 11. Due to the news from China, money was flowing into the dollar in Asia, causing strength in the dollar. This is putting downward pressure on markets across the globe. However, the momo crowd in the U.S. is oblivious as usual and is buying stocks in the early trade.
- The news that Disney (DIS) is replacing Bob Chapek with Bob Iger is not only causing DIS stock to gap up over 9%, it is also causing optimism. DIS is a part of the Dow Jones Industrial Average.
- There is also optimism over seasonality. Thanksgiving week is historically up 75% of the time.
- Countering the optimism is news from China.
- The Chinese market was running up on hopes of loosening COVID restrictions. Now the hope is meeting reality.
- A transportation hub that was supposed to be the test case for loosening restrictions is closing schools and ordering residents to stay home for five days.
- China has reported COVID related deaths for the first time in six months.
- Hong Kong leader John Lee has caught COVID after meeting with Chinese President Xi in Thailand at the Asia-Pacific Economic Cooperation forum.
- Hong Kong stocks fell 2%.
- The chart shows that the stock market is consolidating in no man’s land between the two zones marked support/resistance zone.
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 holding above $16,000.
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 $1744, silver futures are at $20.84, and oil futures are at $79.48.
S&P 500 futures resistance levels are 4000, 4200 and 4318: support levels are 3950, 3860 and 3770.
DJIA futures are down 18 points.
Protection Band And What To Do Now
It is important for investors to look ahead and not in the rearview mirror.
Consider continuing to hold good, very long term, existing positions. Based on individual risk preference, consider holding 🔒 in cash or treasury bills 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 band 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.
