By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
Better Earnings
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:
- In yesterday’s Morning Capsule we wrote:
Here is what to watch.
Technical – the character of the first rally and subsequent pullback. This is the most important thing to watch in the short term.
Fundamentals – watch earnings. 109 S&P 500 companies will report earnings this week.
Macro – jobs report on Friday. Also watch statements by Fed officials.
- Technical – the chart shows that the market closed above the prior first resistance zone. Now this resistance zone becomes a support zone. The chart shows that the rally has been on a reasonably high volume. All of this is positive in the very short term.
- Fundamentals – 80% of the earnings reported so far are better than expected.
- Macro – the Fed talk has shifted. The new talk is that the Fed may not need to be as aggressive as the gurus were saying last week and yesterday.
- Many bearish gurus are calling for selling this rally. As of this writing, it is not clear as to how much impact selling from their followers will have on the market today.
Blind Money
Today is the first of the month. Blind money will pour into the market. Blind money is the money that investors send to the market on the first of every month without any analysis and irrespective of market conditions.
Russia
France appears to be playing a pivotal role and is helping ratchet down the tension between Russia and the U.S. over Ukraine. This is positive for the stock market but negative for oil.
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.
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 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 $1803, silver futures are at $22.90, and oil futures are $86.96.
S&P 500 futures resistance levels are 4600, 4713, and 4770: support levels are 4460, 4400, and 4318.
DJIA futures are up 35 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.
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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.
