By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
Note the following:
- The chart shows the last Arora call to raise cash.
- Smart money was selling stock futures yesterday evening.
- The selling has accelerated this morning.
- On the surface, the cause for the selloff is more concerns about the delta variant of the virus.
- The reality is more than the headline about the virus.
- The chart shows that RSI had a divergence. In plain English, this means that when stock prices were going up, RSI was going down. This indicated a loss of internal momentum in the stock market.
- As we have written before, when a market gets overbought and there is RSI divergence, it tends to pull back. After the fact, the gurus find reasons to explain the drop.
- Investors should pay attention to the week starting out with likely negative gamma positions in the stock market-related options. In plain English, it simply means that the market makers for options have a big reason to sell.
- Bond yields are falling precipitously. At this stage in the economy, this is a big negative.
- Note from the chart that RSI is reaching the oversold level.
- When RSI becomes oversold, the market tends to bounce. After the bounce, talking heads come out in force to explain the reasons for the bounce.
Momo Crowd And Smart Money In Stocks
The momo crowd is 🔒 (To see the locked content, please take a 30 day free trial) Smart money is 🔒.
The momo crowd is 🔒 gold in the early trade. Smart money is 🔒.
For longer-term, please see gold and silver ratings.
OPEC+ has announced a deal increasing oil production. Oil is falling on the news.
As full disclosure, ZYX Short has a short position in oil.
The momo crowd is 🔒 oil in the early trade. Smart money is i🔒.
For longer-term, please see oil ratings.
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 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 $1801, silver futures are at $25.14, and oil futures are $68.78.
S&P 500 futures resistance levels are 4318, 4400, and 4460: support levels are 4200, 4000, and 3950.
DJIA futures are down 523 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 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, 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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