By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
Investor Optimism
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 is in the support/resistance zone.
- The chart shows RSI can go either way.
- Wall Street positioning going into the election is positive. Understanding positioning can give you an edge. To develop deep knowledge of positioning, listen to the podcast titled “Market Mechanics: Positioning.”
- Due to the positive positioning of Wall Street, if Republicans do not capture the Senate, there is a fair probability of a quick selloff.
- The stock market has gone up after a midterm election 18 of the last 18 times.
- The S&P 500 has gained an average of 6.3% based on data all the way back to 1930 in the three months following the midterm election.
- As most investors are focused on the election, prudent investors should be thinking about Consumer Price Index (CPI) data that will be released on November 10 at 8:30 am ET.
- Consensus for CPI is 0.7%.
- Consensus for Core CPI is 0.5%.
- In The Arora Report analysis, the near-term direction of the stock market will be dictated by CPI.
China
There is a report that China has increased oil imports in preparation for reopening.
Europe
Eurozone Retail Sales came at 0.4% vs. 0.4% 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 🔒 in the early trade.
Gold
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
The momo crowd is 🔒 in the early trade. Smart money is 🔒 in the early trade.
For longer-term, please see oil ratings.
Bitcoin
Bitcoin falls under $20,000 on contagion risk as the token of crypto exchange FTX falls. This appears to be due to the conflict between FTX and Binance. Binance is the world’s largest crypto exchange.
A whale sold FTT pushing it down to under $16 from about $22. FTT has since bounced and is trading above $17 as of this writing.
Markets
Our very, very short-term early stock market indicator is 🔒 but can quickly turn 🔒. 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 $1676, silver futures are at $20.82, and oil futures are at $91.39.
S&P 500 futures resistance levels are 3860, 3950, and 4000: support levels are 3770, 3630, and 3600.
DJIA futures are up 124 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 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 band 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.
