IN THE STOCK MARKET WALL STREET MECHANICS TAKE OVER

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By Nigam Arora & Dr. Natasha Arora

Editor’s Note:
This is the Afternoon Capsule that was provided before CPI was released.  CPI was released this morning.  To see the latest on CPI, please see the Morning Capsule that is available to paying subscribers.  The Morning Capsule is issued every morning before the market open.

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

Buying Panic In Bonds And Gold

A buying panic is occurring in both bonds and gold as money continues to rush into the safety of safe havens.

  • Yields continue to fall precipitously as money is panicking into the safety of Treasury bonds.
  • Gold went above resistance at $1900 like a hot knife through butter and is comfortably levitating above $1900. The front month gold futures are trading at $1915 as of this writing.

Wall Street Mechanics

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 the Morning Capsule, we wrote:
  • Bearish gurus are saying that another leg of the bear market is starting.

  • Bullish gurus are saying  that a new bull market is starting.

  • In the Morning Capsule, we also wrote:

In The Arora Report analysis, it will come down to market mechanics and not the macro and fundamentals.  Whichever way market mechanics succeed in pushing the stock market, first Wall Street’s algos, and then technical investors will jump on that direction. Once the move starts taking place in one direction, there is a high probability that it might be sustainable in that direction.

  • The chart shows the stock market turned around and started running up shortly after the open.
  • Algos are programmed to buy when yields fall, and the algos started buying.
  • As algos ran up the stock market, technical buyers were encouraged to buy.
  • There is also significant buying from dip buyers who believe there is blood in the street and now is the time to buy.
  • Based on history, a massive bold federal program like the new bank rescue program would have caused the stock market to go up more than 1,000 DJIA points, but the stock market is up only 145 DJIA points as of this writing.  The reason is that those who believe that a new leg in the bear market has started continue to sell into the strength.
  • Speculation that the Fed will not raise interest rates at the March FOMC meeting is now built into the stock market.
  • 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 VUD indicator is green, indicating net demand for stocks.
  • Investors need to remember that CPI will be released Tuesday at 8:30am ET.
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Money Flows

The momo crowd money flows since the Morning Capsule are 🔒 (To see the locked content, please take a 30 day free trial).

Smart money flows since the Morning Capsule are 🔒.

Short squeeze money flows are 🔒.

A Special Note To New Subscribers

Note the smart money behavior.  Smart money tends to sell into strength on strong up days.

New subscribers should consider adopting smart money’s way of investing and trading.

Sentiment

Sentiment is 🔒.

Sentiment is a contrary indicator at extremes.  In plain English, this means that when sentiment becomes extremely positive it is time to sell and when sentiment becomes extremely negative it is time to buy.

Close

There appear to be buy on close orders.

There is merit to watching the pattern of market on close orders as they represent the day’s dominant net cumulative activity by many professionals and funds.

Gold

The momo crowd money flows in gold are 🔒 since the Morning Capsule.

Smart money flows are 🔒 in gold since the Morning Capsule.

Oil

The momo crowd money flows in oil are 🔒 since the Morning Capsule.

Smart money flows in oil are 🔒 since the Morning Capsule.

Buy Zones And Buy Now Ratings

🔒

Nibbling

🔒

This post was published yesterday in The Arora Report paid services.  Since then the Morning Capsule has had an update in the paid services.

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Picture of 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.

Picture of 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.

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