By Nigam Arora
To gain an edge, this is what you need to know today.
Jobs Report Shocker
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 the stock market is rising this morning. There are two reasons behind the rise:
- Jobs report
- Proposal for the E.U. to release oil and diesel
- The chart shows the stock market is approaching the low band of zone 1 (resistance).
- RSI on the chart shows the stock market has room to run.
- The chart shows that it will not take much for the stock market to slice through the resistance and make a new high. On the other hand, if the stock market is not able to maintain its gains, it will technically be a negative.
- The jobs report is a shocker. Here are the details:
- Headline nonfarm payrolls came at 29K vs 84K consensus.
- Private nonfarm payrolls came at 46K vs 100K consensus.
- Average hourly came at 0.1% vs 0.3% consensus.
- Unemployment came at 4.2% vs 4.1% consensus.
- Average work week came at 34.4 vs. 34.3 consensus.
- As of this writing in the premarket, the stock market is celebrating very weak job creation. The reason for the celebration is the stock market is addicted to artificially low interest rates. Weak jobs growth almost assures that the Fed will likely not raise interest rates in the October meeting. As a member of The Arora Report, you have been ahead of the curve. We had previously shared with you that the Fed was unlikely to raise interest rates in October. The reason is that if the Fed were to raise interest rates in October just before the midterm elections, the Fed would have to deal with President Trump.
- In The Arora Report analysis, the probability of the Fed raising interest rates in October is now less than 5%. Fed fund futures are indicating a probability of 16%.
- In the middle of all of the bullishness this morning, prudent investors should focus on the fact that the average hourly earnings increased by only 0.1%. This is well below the inflation rate. The consumer is losing buying power. Since the U.S. economy is 70% consumer based, historically the consumer is very important to the economy, and in turn the stock market. This time, it is a K-shaped economy. Lower income consumers are suffering, while the top 10% are doing extremely well due to the AI boom, high stock market, and ability to earn higher interest rates on cash balances.
- As much as stock market bulls may contend that the lower income population does not matter because they do not invest in the stock market anyway, the lower income population does vote. The continuing trend of the lower income population suffering could ultimately lead to business unfriendly policies in Washington over the next few years, unless the trend reverses. In The Arora Report analysis, potentially business unfriendly policies over the next few years could negatively impact the stock market.
- France is proposing to the E.U. to release 50M barrels of diesel and 50M barrels of oil from reserves. This is in response to President Trump requesting President Macron to release 100M barrels of diesel. The price of diesel has skyrocketed, increasing shipping costs.
- President Trump is also considering banning the export of diesel from the U.S.
- Saudi Arabia has increased flow in the East-West pipeline to 80% of capacity..
- Oil is falling in response to the above developments.
- Blind money will continue flowing into the stock market this afternoon. Blind money is the money that flows into the stock market on the first two days of the month without any analysis irrespective of market conditions.
- As an actionable item, the sum total of the foregoing is in the Arora Protection Band, which strikes the optimum balance between various crosscurrents. Please scroll down to see the Arora Protection Band. The Arora Protection Band is one of the large number of unique edges that are available to members of The Arora Report.
Magnificent Seven Money Flows
Most portfolios are now heavily concentrated in the Mag 7 stocks. For this reason, to get ahead and get an edge, investors need to dig below the surface of the Mag 7 stocks. It is equally important to rise above the noise of daily news on the Mag 7 stocks. The best way to get an edge, dig below the surface, and rise above the noise of the daily news is to pay attention to early money flows in the Mag 7 stocks on a daily basis. When there is significant news in the Mag 7 stocks that rises above the threshold of noise and impacts your entire portfolio, it is covered in the main section above.
In the early trade, money flows are positive in Amazon (AMZN), Nvidia (NVDA), Microsoft (MSFT), Alphabet (GOOG), Meta (META), Tesla (TSLA), and Apple (AAPL).
In the early trade, money flows are positive in S&P 500 ETF (SPY) and Nasdaq 100 ETF (QQQ).
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.
Note for new members: Smart money often sells into the strength generated by momo crowd buying and buys into the weakness generated by momo crowd selling. Over a long period of time, investors come out ahead by adopting smart money’s ways. The exception is in a raging bull market – for very short term trades, consider following the momo crowd and not smart money. Smart money is an important indicator but is only one of hundreds of indicators that go into determining the Arora Protection Band and signals. Please click here and here to understand how signals are generated.
Very Very Short-Term Indicator
The Arora Report’s proprietary very, very short-term early stock market indicator is ***. Today is a Friday, and short squeezes tend to occur on Fridays. 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.
Gold
The momo crowd is *** gold in the early trade. This is reflected in gold ETF (GLD), silver ETF (SLV), gold miner ETF (GDX), and silver miner ETF (SIL). 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 (BTC.USD) is seeing buying.
Markets
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.
S&P 500 futures are trading at 7795 as of this writing. S&P 500 futures resistance levels are 7831, 7900, and 8000 : support levels are 7733, 7626, and 7541.
DJIA futures are up 545 points.
Gold futures are at $4229, silver futures are at $61.74, and oil futures are at $89.34.
Arora Protection Band And What To Do Now
It is important for investors to look ahead and not in the rearview mirror. The proprietary Arora Protection Band from The Arora Report is very popular. The Arora Protection Band puts all of the data, all of the indicators, all of the news, all of the crosscurrents, all of the models, and all of the analysis in an analytical framework that is easily actionable by investors.
Consider continuing to hold good, very long term, existing positions. Based on individual risk preference, consider holding *** in cash, Treasury bills, short term fixed income, 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.
A protection band of 0% would be very bullish and would indicate full investment with 0% in cash. A protection band of 100% would be very bearish and would indicate a need for aggressive protection with cash and hedges or aggressive short selling.
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.
Traditional 60/40 Portfolio
Probability based risk reward adjusted for inflation does not favor long duration strategic bond allocation at this time.
Those who want to stick to traditional 60% allocation to stocks and 40% to bonds may consider focusing on only high quality bonds and bonds of five year duration or less. Those willing to bring sophistication to their investing may consider using bond ETFs as tactical positions and not strategic positions at this time.
To take a free 30-day trial to paid services to gain access to more opportunities, please click here.
This post was just published on ZYX Buy Change Alert.
Markets can generate substantial wealth for knowledgeable investors. NOW YOU TOO CAN ALSO SPECTACULARLY SUCCEED AT MEETING YOUR GOALS WITH THE HELP OF THE ARORA REPORT. You are receiving less than 1% of the content from our paid services. …TO RECEIVE REMAINING 99%, INCLUDING MANY ATTRACTIVE INVESTMENT OPPORTUNITIES AND SIGNALS IN REAL TIME, TAKE A FREE
TRIAL TO PAID SERVICES.
The Arora Report is one of the only major global investment newsletters that does not employ a single salesperson—because it does not need to. While competitors rely on high-pressure sales tactics, The Arora Report grows purely through results, with satisfied members recommending it to their family and friends.
Join the service that investors trust the most and recommend to family and friends.
Please click here to take advantage of a FREE 30 day trial.
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.
