STOCK MARKET GENERALS MARCH ON LEAVING THE SOLDIERS BEHIND

By Nigam Arora & Dr. Natasha Arora

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

Generals Leave Soldiers Behind

Please click here for a chart of  Nasdaq 100 ETF (QQQ).

Note the following:

  • QQQ is dominated by large-cap tech stocks such as AAPL, AMZN, GOOG, MSFT, and FB.  QQQ is cap-weighted.
  • The chart shows that for the period shown, QQQ has moved up 14.12%.  Equal weighted QQQ (QQEW) has moved up only 10.04%.
  • The chart shows that S&P 500 ETF (SPY) has moved up 7.76% but equal-weighted S&P 500 ETF (RSP) moved up 3.11%.
  • QQQ represents the generals in the battle between the bulls and the bears.  RSP represents the soldiers.
  • RSP is lagging QQQ by 11%.  Imagine a battlefield where generals are running fast and running ahead while soldiers have fallen way behind.
  • The foregoing represents another aspect of risk that the momo crowd is ignoring.

Consumer Confidence

The Consumer Confidence number will be released at 10:00 am ET.  The recent data from the University of Michigan has shown that consumer confidence is weakening.  The new data has the potential to move the markets.  Expectations are for the number to come at around 122.

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

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 $1812, silver futures are at $24.10, and oil futures are $68.56.

S&P 500 futures resistance levels are 4600  and 4900: support levels are 4460, 4400, and 4318.

DJIA futures are down 14 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.

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.

 

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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.

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