By Nigam Arora & Dr. Natasha Arora
Weekly Digest from The Arora Report is popular among serious investors and money managers because they have found studying insights from the prior week gives them an edge over the coming weeks. Here is the day by day rundown from the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers of The Arora Report.
Please scroll down for the section ‘Protection Bands and What To Do Now.’
DOCTOR COPPER GIVES A CAUTION SIGNAL FOR THE STOCK MARKET
To gain an edge, this is what you need to know today.
Doctor Copper Caution Signal
Please click here for a chart of copper ETF (CPER).
Note the following:
- Copper is known as Doctor Copper because it often gives reasonably good signals on the health of the world economy.
- The chart shows a lower high on copper. This is a negative.
- Copper is responding to the potential change in the Fed’s policy.
- The chart shows that copper cut through the support zone like a hot knife through butter. This is very negative.
- The chart shows that copper is now right at the next support zone.
- It is important for copper to hold this support zone.
- RSI on the chart shows that copper is oversold. The probability of a bounce in copper is fairly high.
- The chart shows heavy volume on the last drop. This is a negative.
- Stock market investors should carefully watch copper price action.
- Expect volatility related to option expiration.
Momo Crowd And Smart Money In Stocks
The momo crowd 🔒 (To see the locked content, please take a 30 day free trial) stocks in the early trade. Smart money is 🔒.
Gold
The momo crowd is 🔒gold in the early trade. Smart money is 🔒.
For longer-term, please see gold and silver ratings.
Oil
The momo crowd is 🔒 oil in the early trade. Smart money is 🔒.
For longer-term, please see oil ratings.
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 .up and bonds are ticking down.
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 $1783, silver futures are at $23.16, and oil futures are $62.82.
S&P 500 futures resistance levels are 4460, 4600, and 4900: support levels are 4400, 4318, and 4200.
DJIA futures are up 17 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.
SELLING IN ASIA OVER THE FED MINUTES CONTINUES TO THE U. S. STOCK MARKET
To gain an edge, this is what you need to know today.
Selling In Asia
Please click here for a chart of Nasdaq 100 ETF (QQQ). (As the post is published, you may not be able to see the chart due to technical difficulties.)
Note the following:
- There has been heavy selling in the Asian markets over the Fed minutes released yesterday.
- The selling carried to Europe and has now carried to the U. S. stock market in the premarket.
- Expect Wall Street gurus to come out and say that taper is not a big deal. It may be only $10 billion a month. It will be interesting to see if Wall Street’s attempt to rally the market succeeds.
- The chart shows that RSI is now oversold. It is easy to trigger a rally when the market is oversold.
- The momo crowd is buying the dip.
Jobless Claims
Initial Claims came at 348K vs. 370K consensus.
Momo Crowd And Smart Money In Stocks
The momo crowd is 🔒 stocks in the early trade. Smart money is 🔒.
Gold
The momo crowd is🔒 gold in the early trade. Smart money is🔒.
For longer-term, please see gold and silver ratings.
Oil
The momo crowd is 🔒 oil in the early trade. Smart money is 🔒.
For longer-term, please see oil ratings.
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 $1791, silver futures are at $23.39, and oil futures are $63.07.
S&P 500 futures resistance levels are 4400, 4460, and 4600: support levels are 4318, 4200, and 4000.
DJIA futures are down 248 points.
INVESTORS EAGERLY AWAIT FED MINUTES
To gain an edge, this is what you need to know today.
Fed Minutes
Please click here for a chart of Nasdaq 100 ETF (QQQ).
Note the following:
- The Fed minutes will be released at 2:00 pm ET.
- We will be carefully scrutinizing the Fed minutes and will share with you if there are any important new insights.
- Right now the biggest determinate of where the stock market will head is the Fed policy.
- Head of the Fed minutes the chart shows a continued divergence in RSI. This indicates loss of internal momentum in tech stocks.
- The chart shows the market is consolidating below the trend line. This again indicates loss of internal momentum.
Housing Starts
The housing market is still red hot but slowing.
Housing Starts came at 1.534M vs. 1.610Mm consensus.
Building Permits came at 1.635M vs. 1.610M consensus.
Momo Crowd And Smart Money In Stocks
The momo crowd is 🔒 stocks in the early trade. Smart money is🔒.
Gold
The momo crowd is 🔒 gold in the early trade. Smart money is 🔒.
For longer-term, please see gold and silver ratings.
Oil
The momo crowd is 🔒 oil in the early trade. Smart money is 🔒.
For longer-term, please see oil ratings.
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 up and bonds are ticking down.
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.
Gold futures are at $1790, silver futures are at $23.70, and oil futures are $66.94.
S&P 500 futures resistance levels are 4460, 4600, and 4900: support levels are 4400, 4318, and 4200.
DJIA futures are down 97 points.
STOCK MARKET GURUS MAY BE WRONG ABOUT PULL-FORWARD DEMAND
To gain an edge, this is what you need to know today.
Gurus Likely Wrong
Please click here for a chart of Home Depot (HD).
Note the following:
- The Morning Capsule is about the big picture and not about individual stocks.
- The chart of HD is simply being used to illustrate the bigger point.
- The chart shows when HD reported earnings.
- HD earnings were better than the consensus and whisper numbers.
- The way the positioning is in HD stock, on these earnings, the stock should have gone up. The chart shows the stock has fallen on the earnings in the pre-market.
- The reason for the fall in HD stock is that there are signs of pull-forward demand. In plain English, this means that the pandemic fueled demand for home renovations has pulled demand from future renovations.
- We have previously written that the stock market gurus were likely wrong in their earnings models as they have been projecting future earnings without considering pull-forward demand in their models.
- 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 the supply of HD stock post-earnings.
- The stock market is not rational. The momo crowd buys the tiniest dip. The tell for investors will be if the momo crowd steps in and runs up HD stock from here.
Retail Sales
The foregoing is also confirmed on a broader scale by the Retail Sales data that was released at 8:30 am ET.
Retail Sales came at -1.1% vs. -0.2% consensus.
Retail Sales Ex-auto came at -0.4% vs. +0.2% consensus.
Momo Crowd And Smart Money In Stocks
The momo crowd is 🔒 stocks in the early trade. Smart money is🔒.
Gold
The momo crowd is 🔒 gold in the early trade. Smart money is🔒.
For longer-term, please see gold and silver ratings.
Oil
The momo crowd 🔒 oil in the early trade. Smart money is 🔒.
For longer-term, please see oil ratings.
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 up and bonds are ticking down.
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 $1790, silver futures are at $23.74, and oil futures are $66.98
S&P 500 futures resistance levels are 4460, 4600, and 4900: support levels are 4400, 4318, and 4200.
DJIA futures are up/down 235 points.
JOINT CHIEFS CHAIRMAN ADMITS TERRORIST THREATS SOONER THAN BIDEN INDICATED, TAPER
To gain an edge, this is what you need to know today.
Terrorist Threat
Please click here for a chart of Dow Jones Industrial Average (DJIA).
Note the following:
- First and foremost we are politically agnostic. Our sole job is to help investors. This post is not about politics or terrorism, but about how certain events may unfold and impact investors in the very long term.
- We do not expect any impact of Afghanistan on the stock market in the short term.
- The chart shows the impact of the 9/11 terrorist attack on the stock market.
- The chart shows that investors bought the dip running the market higher than where it was on 9/11 in no time.
- Now there is the potential of an attack significantly worse than the 9/11 attack.
- The Chairman of the Joint Chiefs of Staff, Mark Milley, has admitted terrorist threats may occur sooner than Biden indicated.
- There are reports that terrorist organizations similar to ISIS and Al Qaeda have already started moving personnel to Afghanistan to set up bases for the purpose of major attacks on Europe and the United States. The movement is apparently taking place through Pakistan. Terrorists want to build their organizations in Afghanistan at lightning speed to emulate the lightning speed with which the Taliban have taken over Afghanistan.
- At the time of the 9/11 attack, the Taliban were a primitive rag-tag organization. Now the Taliban are highly sophisticated and their morale is high.
- Any new terrorist attacks on the United States or Europe are likely to be more sophisticated and more impactful.
- Now the Taliban have taken possession of highly sophisticated modern American weapons.
- There are reports that the Taliban plans to recruit former Afghan military personnel trained to use U. S. weapons.
- There are several differences this time. There is an increasing need for investors to diversify outside the United States.
- China has emerged as the biggest strategic rival of the United States.
- In 2001, China was not allied with the Taliban.
- This time China hedged its bets and has already recognized the Taliban as a legitimate military and political force. There is speculation that China will recognize the Taliban government.
- Afghanistan has great mineral wealth. With the proliferation of electric vehicles and green energy, there is a bigger demand for these minerals. China wants these minerals.
- The U. S. has imposed sanctions against Iranian oil. In spite of these sanctions, China has become the biggest buyer of Iranian oil.
- China has the ambition to build a pipeline from the gulf to China.
- The sum total is that the developments in Afghanistan will help China in its strategic rivalry with the United States.
Tapering
There is a report that the Fed is feeling boxed and may be forced to start tapering sooner than what the Fed had been indicating.
Momo Crowd And Smart Money In Stocks
The momo crowd is 🔒 stocks in the early trade. Smart money is 🔒.
Gold
The momo crowd is 🔒 gold in the early trade. Smart money is 🔒.
For longer-term, please see gold and silver ratings.
Oil
The momo crowd 🔒 oil in the early trade. Smart money is 🔒.
For longer-term, please see oil ratings.
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 $1780, silver futures are at $23.68, and oil futures are $66.34.
S&P 500 futures resistance levels are 4460, 4600, and 4900: support levels are 4400, 4318, and 4200.
DJIA futures are down 97 points.
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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.
