By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
Review Your Portfolio
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 no man’s land.
- The chart shows that the price pattern is such that a major binary move can occur in either direction.
- Two major potentially market moving events are ahead.
- CPI data will be released Tuesday, December 13 at 8:30am ET.
- FOMC will announce its rate decision on Wednesday, December 14 at 2pm ET followed by Powell’s press conference. The consensus is for the Fed to raise interest rates by 50 basis points.
- Start with Arora’s Second Law of Investing and Trading, which states “Nobody knows with certainty what is going to happen next in the markets.”
- Run away from anyone who claims to know the CPI data tomorrow or what Powell will say in his press conference.
- Arora’s Third Law states, “ Making investing and trading decisions based on probabilities is the only realistic and profitable approach.”
- Here are the probabilities:
- Market going higher 40%
- Market staying range bound 30%
- Market falling 30%
- There are many scenarios. Here are the base cases:
- If an up move occurs, it is likely to be 5% – 12% between now and the end of the year.
- If a down move occurs, it is likely to be 10% – 22% between now and the end of the year.
- In view of the high uncertainty, consider reviewing your portfolio and adjusting your cash level and hedges based on your personal preference within the protection band.
Game Changing Fusion Breakthrough
The U.S. Energy Secretary Jennifer Granholm is expected to announce tomorrow a major breakthrough in fusion.
In fusion, two atoms are fused together. One of the companies Nigam Arora founded worked on fusion. In very simple words, think of fusion as a man-made sun. The breakthrough appears to have occurred at Lawrence Livermore National Laboratory. The lab appears to have achieved net energy gain from an experimental fusion reactor.
Assuming the breakthrough is what it appears to be and the breakthrough is followed by rapid progress towards commercialization, it will have a major impact on many of your investments. It will create many new opportunities to generate a fortune. All of this is likely years away, but investors will likely start moving various investments in anticipation.
If the fusion breakthrough is an area of interest for a podcast, please write to Ambassador@TheAroraReport.com.
COVID By A Different Name
COVID is rapidly spreading in China. However, officially China is reporting a drop in the number of cases. The reason is that they are testing a lot less and, in some places, they are stopping testing. After rigorously enforcing Zero COVID policy and claiming that COVID was very dangerous, Chinese authorities have made an abrupt change and are now claiming that Omicron is no more dangerous than the flu. A large section of the Chinese population is puzzled. There is speculation that the Chinese government is considering changing the name of the COVID virus.
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 🔒 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 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 $1801, silver futures are at $23.68, and oil futures are at $71.53.
S&P 500 futures resistance levels are 4000, 4200, and 4318: support levels are 3860, 3770, and 3630.
DJIA futures are up 67 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 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.
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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.
