By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
UK Data
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:
- Momo gurus’ job is to persuade their followers to buy stocks, and the momo crowd professes to know that the stock market is going much higher. They have no real use for data, especially data from overseas. However, the momo crowd faces a problem – there is smart money and other groups in the stock market that pay attention to the data.
- The chart shows that early this morning there was selling pressure on inflation data from the UK.
- Consumer Price Index (CPI) in the UK rose 0.6% month over month vs. 0.5% consensus.
- CPI in the UK rose 10.1% year over year vs. 9.8% consensus.
- Core inflation came at 6.2% year over year vs. 5.9% consensus.
- The Bank of England expects inflation to top out at 13.3% in October.
- The Bank of England appears to be falling behind the curve and may need to increase its key interest rate to 4%.
- This is the highest inflation rate in over 40 years.
- The chart shows that the market experienced steady selling as more traders came to work and understood the implications of the data from the UK.
- The momo crowd continues to buy the tiny dip.
- 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 chart shows that the VUD indicator is mostly orange, indicating a net supply of stocks.
- Retail sales ex-auto were very strong. This shows that the consumer, in totality, is not slowing down even though the lower income segment is getting hurt. Here are the details:
- Retail sales ex-auto came at 0.4% vs. 0.0% consensus.
- Headline retail sales came at 0.0% vs. 0.0% consensus.
- Of special note is the furniture and home furnishing store sales rose 0.2% after declining 0.4% in June. The expectation was that consumers have already bought the furniture they needed during the pandemic and sales would slow.
- Fed minutes will be released at 2pm ET. Smart money will be paying close attention to the minutes to better understand the Fed’s thinking. Expect the momo crowd to dismiss the Fed minutes as old news, irrespective of what they say.
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 experiencing the lowest volatility since October 2020. 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 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 $1785, silver futures are at $19.89, and oil futures are $86.89.
S&P 500 futures resistance levels are 4318, 4400 and 4460: support levels are 4200, 4000 and 3950.
DJIA futures are down 226 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.
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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.
