SWISS SPOIL THE HOPE STRATEGY IN THE STOCK MARKET – SPOT ON EARLY WARNING

Twitter
LinkedIn
Facebook

By Nigam Arora & Dr. Natasha Arora

To gain an edge, this is what you need to know today.

Opportunities Ahead

There are significant opportunities ahead.  Bear markets are great for knowledgeable investors to accelerate generating wealth.

Do not fall for the common pitfall – many investors get excited when the market is going up and buy high, but when bargains start appearing as the market goes down, investors stop watching the market and become disinterested.

The best way to avoid the pitfall is to focus on the clear goal of maximizing the wealth you generate over your lifetime.  Click here for a very helpful podcast to stay focused and avoid the pitfalls.

Swiss Spoil The Hope Strategy

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 stock market fell out of bed after Swiss National Bank (SNB) raised a key interest rate. Here are the details:
    • SNB raised its key interest rate to -0.25% from -0.75%.
    • This was the first increase by SNB since 2007.
    • The increase was unexpected.
    • They expect inflation to be about 3%.
  • The chart shows that the momo crowd using the hope strategy was buying yesterday before the Fed meeting and after the meeting.
  • The chart shows that momo crowd buying became very aggressive after hours.
  • The Arora Report early warning from yesterday morning has proven spot on.  We wrote,

Remember that historically, the first reaction to the Fed is often the wrong reaction and often reverses. 

  • The chart shows that at least temporarily the gains in the stock market from the Fed announcement have reversed.
  • There are two very good reasons why we keep sharing with you that hope is not a good strategy in the stock market.
    • Ideally, we do not want even a single member of The Arora Report to fall in the trap that the momo crowd perpetually stays in. Hope is one of the two main strategies that the momo crowd uses, and they are repeatedly burned.
    • We are seeing an influx of new subscribers as Arora Report members share with their friends how well they have done compared to other services and passive investing.  It is important to help new members not fall in the trap of the hope strategy.
  • 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 magnitude of net demand after hours.
  • The VUD indicator also shows that as of this writing, there is net demand for stocks as the momo crowd is aggressively buying the dip on the hope strategy.

Jobless Claims

Jobless claims came at 218.5K vs. 215K consensus.

Housing Starts

Housing starts came at 1.549M vs. 1.73M consensus.

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 🔒 stocks 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.

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 $1831, silver futures are at $21.55, and oil futures are $114.63.

S&P 500 futures resistance levels are 3770, 3860 and 3950: support levels are 3630, 3600 and 3520.

DJIA futures are down 565 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.

To take a free 30-day trial to paid services to gain access to more opportunities, please click here.

This post was just published on ZYX Buy Change Alert.

Markets can generate substantial wealth for knowledgeable investors. NOW YOU TOO CAN ALSO SPECTACULARLY SUCCEED AT MEETING YOUR GOALS WITH THE HELP OF THE ARORA REPORT. You are receiving less than 2% of the content from our paid services. …TO RECEIVE REMAINING 98% INCLUDING MANY ATTRACTIVE INVESTMENT OPPORTUNITIES, TAKE A FREE
TRIAL TO PAID SERVICES.

Please click here to take advantage of a FREE 30 day trial.

Nigam Arora

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

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.

Subscribe to 'Generate Wealth'

Free Forever

More To Explore

30 Day Free Trial

Cancel within 30 days and you owe nothing

When you take a FREE 30 day trial, you get access to powerful techniques used by billionaires and hedge funds to grow richer. You can continue to use these powerful techniques to grow richer even if you cancel your subscription. You come out ahead by subscribing no matter how you look at it.

Do you want to gain an edge in the markets? Join thousands of your fellow investors and money managers to subscribe to Generate Wealth newsletter.

 

FREE FOREVER

Follow The Most Accurate Stock Market Analysis

Unrivaled Insights
In Bull and Bear Markets

Generate Wealth Newsletter
Free Forever

Generate Wealth Newsletter
Free Forever