By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
Waking Up To Risk
Please click here for a chart of 20+ Year Treasury Bond ETF (TLT).
Note the following:
- Focus on the downward sloping trendline on the chart.
- According to momo gurus, the reverse was supposed to happen. In plain English, this means if the predictions of momo gurus were correct, there would have been an upward sloping trendline.
- The downward trendline on the chart shows that the risk to the stock market has been progressively increasing. However, investors have been asleep. As the quarter turned, all of a sudden some investors have woken up to the risk. The trigger for investors waking up was smart money selling on the first day of a new quarter. As usual, The Arora Report members were ahead of the curve from the Morning Capsule that was published prior to the market open on April 1. We wrote:
Prudent investors should note that today, at least temporarily as of this writing, is a departure from the traditional pattern. As of this writing, the rally in stock futures is fizzling. The reason is that smart money is selling into the strength.
- The chart shows that TLT has fallen into the support zone.
- It is extremely critical for the support zone to hold for the stock market to hold up. Stay tuned to The Arora Report for updates.
- ADP is the largest payroll processor in the country and uses its data to give an advanced glimpse of the jobs picture ahead of the official jobs report that will be released on Friday at 8:30am ET. ADP employment data came stronger than expected. ADP employment change came at 184K vs. 150K consensus.
- ISM Non-Manufacturing PMI will be released at 10am ET. The consensus is 52.6%. If the data is stronger and inflationary, it will be a headwind for the stock market. On the other hand, if the data is weaker, expect a rip roaring rally.
- Powell will be speaking at 12:10pm ET today. Powell’s speech may be market moving. Powell has become the most dovish Fed member. Investors are hoping that Powell will be extra dovish and calm their nerves.
- The Fed’s Bostic maintains that he sees only one rate cut in the fourth quarter.
- Several other Fed officials are speaking today but Powell is likely to overshadow them.
- As an actionable item, the sum total of the foregoing is in the protection band, which strikes the optimum balance between various crosscurrents. Please scroll down to see the protection band.
Magnificent Seven Money Flows
In the early trade, money flows are positive in Meta (META).
In the early trade, money flows are neutral in Apple (AAPL) and Microsoft (MSFT).
In the early trade, money flows are negative in Amazon (AMZN), Alphabet (GOOG), Nvidia (NVDA), and Tesla (TSLA).
In the early trade, money flows are negative 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.
Gold
There is aggressive buying in silver. Silver ETF SLV is in the ZYX Buy Model Portfolio. The position has nice profits.
The momo crowd is *** in the early trade. Smart money is *** in the early trade.
For longer-term, please see gold and silver ratings.
Oil
API crude oil inventories came at a draw of 2.286M barrels vs. consensus of a draw of 2M barrels.
The momo crowd is *** 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. Bitcoin whales have been taking profits by selling bitcoin to retail investors. Retail investors are buying because they do not understand that whales control bitcoin.
Money is to be made in bitcoin. However, to make the money, you need to understand bitcoin whales’ secrets. These secrets are not publicly available. To access the secrets, please click here to fill out the form.
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 range bound.
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 $2298, silver futures are at $26.71, and oil futures are at $85.83.
S&P 500 futures are trading at 5249 as of this writing. S&P 500 futures resistance levels are 5256, 5400, and 5500: support levels are 5210, 5020, and 4918.
DJIA futures are down 47 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 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.
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 seven 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.
