By Nigam Arora & Dr. Natasha Arora

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

Fed Meeting

Please click here for a chart of the Consumer Price Index (CPI).

Note the following:

  • The chart shows that inflation is rising.
  • The Fed claims that inflation is transitory. The Fed does not define transitory, perhaps on purpose.   Does transitory mean that prices that are rising now will pull back?  Does transitory mean that prices that are rising fast now will continue to rise but at a slower rate?
  • The stock and bond markets have bought lock, stock and barrel into the Fed’s claim.
  • Keep in mind that this is just a hypothesis that the Fed put out.  There is no evidence and there is no precedence.
  • Historically, the Fed has often been wrong at critical junctions especially regarding inflation forecast.  Yet, hardly anyone is asking the question, “What if the Fed is wrong?”
  • The Fed meeting starts tomorrow.  The Fed will announce its policy decision at 2:00 pm ET on Wednesday.  This will be followed by a Powell press conference at 2:30 pm ET.
  • The Fed is likely to continue to buy bonds at the rate of $120 billion per month and continue interest rates at zero.
  • Economists pay attention to the dot plot from the Fed.  The dot plot is indicating an interest rate rise in 2023.
  • The market is anticipating the Fed will continue to pump more air into the stock market bubble.
  • We will be carefully reading the tea leaves.  Even the slightest hint of monetary policy tightening has the potential to cause a selloff.

Meme Stocks

CRSR, a maker of computer hardware for gamers, is a newly minted meme stock.  The meme crowd is buying the stock aggressively this morning on the belief that their own buying is big enough to drive CRSR stock to the moon.

Bitcoin

Bitcoin has crossed $40,000 on a comment by Musk.

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 🔒.

Gold

Money is again aggressively moving out of gold and into bitcoin as many investors have started believing that the bitcoin drop may be over.

The momo crowd is 🔒 gold in the early trade.  Smart money is 🔒.

For longer-term, please see gold and silver ratings.

Oil

The momo crowd is 🔒 oil in the early trade.  Smart money is 🔒.

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 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 $1848, silver futures are at $27.62, and oil futures are $71.63.

S&P 500 futures resistance levels are 4318  and 4400: support levels are 4200, 4000, and 3950.

DJIA futures are up/down 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, on dips, 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, 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

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.