By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
Dramatic Upheavals
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 in spite of blind money buying and momo buying, the stock market rally is stalled.
- RSI on the chart shows that the stock market is losing its internal momentum to the upside.
- The market needs a trigger to gain upside momentum again.
- Jamie Dimon, CEO of the nation’s largest bank JPM, is preparing for dramatic upheavals. Here are the key points from his annual letter:
- Inflation, the Fed policy, and the Ukraine war could lead to unpredictable consequences.
- The consumer is flush with cash with more than $2 trillion in excess savings.
- Stimulus lasted too long.
- Interest rate rise by the Fed is needed to control inflation.
- Interest rates may need to rise significantly higher than the market expects.
- The war in Ukraine will slow the world economy.
- Risks ahead have dramatically increased.
- Jamie Dimon and JPMorgan are part of smart money. For many investors, it is a learning moment. We encourage you to read Dimon’s long letter. Here is the link. Investors should note the following:
- Dimon has an opinion but is not locked in his opinion.
- He is looking at various scenarios.
- Even though he is bullish, he is seriously looking at bearish arguments.
- He is doing a 360-degree analysis.
- Dimon understands that the future is uncertain and is preparing for the uncertainty.
- Contrast Dimon’s letter with research from momo gurus. Momo gurus get locked in a one-sided opinion. They advance the arguments that support their opinion and ignore the arguments that go against their opinion.
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 range bound.
In India, traffic to bitcoin exchanges has dropped by over 50% due to a new tax regime.
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 $1937, silver futures are at $24.86, and oil futures are at $102.54.
S&P 500 futures resistance levels are 4600, 4713, and 4770: support levels are 4460, 4400, and 4318.
DJIA futures are down 21 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 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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This post was just published on ZYX Buy Change Alert.
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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.
