By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
Gold Bulls Excited
Please click here for a chart of gold ETF GLD.
Note the following:
- The chart is a monthly chart to give you a long term perspective.
- Long time members of The Arora Report know that The Arora Report has an unparalleled record of making accurate buy and sell calls on gold. Here are two Arora calls that have been credited with moving gold across the globe.
- The chart shows an Arora sell signal given in 2011 at $1904 on exactly the day gold topped before falling to nearly $1000.
- In 2016, when almost everyone on Wall Street had anointed Hillary Clinton as the next president, even before the election, The Arora Report was among a small minority that predicted Trump would win. On election night, as results came in and it became apparent that Trump would win, gold soared. At the exact top, The Arora Report gave a sell signal which was picked up by Arora Report members in Asia, which started a cascade of selling. Business Standard, the Wall Street Journal of India, credited The Arora Report with moving gold in its headline. Here is the Business Standard article: Arora Report Creates Ripples In Bullion Market.
- The chart shows the resistance zone for gold.
- The chart shows that gold has rallied to the bottom band of the resistance zone.
- Gold bulls are excited, believing that this time gold may breakout above the resistance zone.
- In The Arora Report analysis, if gold breaks above the resistance zone, there is significant room to run. There are several important observations about this gold move of interest to investors.
- Gold does not like high interest rates. Normally, when interest rates go higher, gold moves down. Over the last two weeks, even though interest rates have been moving up, gold has continued to move up.
- In The Arora Report analysis, if interest rates continue to rise, the gold rally may be stopped in its tracks.
- Significant buying appears to be coming from Asia.
- It is likely that central banks of countries like China, India, and Saudi Arabia are buying gold.
- If a northern front is opened in Israel, gold will benefit.
- Gold has three functions for investors:
- Insurance against geopolitics, inflation, debt demonetization, and loss in the value of the dollar
- Investment
- Short term trades
- For those interested in learning more about using gold as insurance, a new podcast titled “Middle East Turmoil: How Much Gold To Own As Insurance” is in post production. The podcast will be available in Arora Ambassador Club.
- As a reference for new members, gold ETF GLD is in the ZYX Allocation Model Portfolio and silver ETF SLV and gold miner NEM are in ZYX Buy Model Portfolio.
- 10-year Treasury yields are hovering near 5%, the highest level since 2007. Right now, Wall Street’s machines are programmed to sell stocks on yields above 5% and buy stocks on yields below 5%. As the yield fluctuates around 5%, buying and selling by Wall Street machines is causing volatility.
- 30% of S&P 500 earnings are this week. The most important earnings are from Microsoft (MSFT), Alphabet (GOOG, GOOGL), Meta (META), and Amazon (AMZN). These four companies comprise 17% of S&P 500.
- As an actionable item, the sum total of the foregoing is in the protection band, which strikes the optimum balance between various crosscurrents. Please scroll down to see the protection band.
Magnificent Seven Money Flows
In the early trade, money flows are positive in Meta, Nvidia (NVDA), and Microsoft.
In the early trade, money flows are negative in Amazon, Alphabet, Tesla (TSLA), and Apple (AAPL).
In the early trade, money flows are mixed 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.
Gold
The momo crowd is *** gold in the early trade. Smart money is *** gold 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 above $30,000 as excitement builds on a potential spot bitcoin ETF. As is usually the case, whales ran up bitcoin over the weekend. Retail investors are getting excited and buying aggressively.
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 $1990, silver futures are at $23.34, and oil futures are at $87.50.
S&P 500 futures are trading at 4230 as of this writing. S&P 500 futures resistance levels are 4318, 4400, and 4460: support levels are 4200, 4000, and 3950.
DJIA futures are down 161 points.
Protection Band And What To Do Now
It is important for investors to look ahead and not in the rearview mirror.
Consider continuing to hold good, very long term, 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.
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.
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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.
