By Nigam Arora
To gain an edge, this is what you need to know today.
Showcase Of New World Order
Please click here for a chart of gold ETF GLD.
Note the following:
- The chart shows gold hit an all time high.
- The chart shows that after four failed attempts, gold has broken above zone 1 (resistance). Prudent investors should carefully watch to see if this breakout is sustained or fails. If the breakout is sustained, the next target for gold is $4000.
- Gold is rising primarily because the U.S has a new problem. China, India, and Russia showcased alignment in a snub to the U.S. In The Arora Report analysis, if China is successful in bringing about the new world order on display this weekend, prudent investors should be concerned.
- The world witnessed pictures of China’s President Xi, India’s Prime Minister Modi, and Russia’s President Putin expressing unity to establish a new world order.
- The world also witnessed India’s Prime Minister Modi hugging Russia’s President Putin.
- So far, India has stared down the 50% tariffs imposed by the U.S. on India for buying Russian oil.
- The purpose of U.S. tariffs on India was to stop India from buying Russian oil. Change has unintended consequences – in this case, the change sought by the U.S. has pushed India closer to China and Russia and away from the U.S.
- In The Arora Report analysis, Russia is now selling oil to India at about an $8 per barrel discount to the international price and $1 per barrel cheaper than what Russia was charging when the U.S. imposed tariffs on India.
- Central banks now hold more gold than U.S. Treasuries for the first time since 1996. For those wanting next level information, a new podcast will be published shortly titled “Central Banks Ditch U.S. Treasuries In Favor Of Gold.”
- The yield on 30 year French bonds has risen to 4.5% – the highest level since 2009. The government of Prime Minister Bayrou in France is expected to fall over its efforts to control France’s budget deficit.
- The yields on long term bonds in Germany are rising to 3.4% – the highest level since 2011.
- Rising yields overseas are spilling over to the U.S. Rising yields are bringing selling into the U.S. stock market.
- A small part of rising yields in the U.S. is attributable to last week’s Lisa Cook firing from the Fed and Cook filing a lawsuit.
- An appeals court has overturned tariffs. The case is now going to the Supreme Court.
- In The Arora Report analysis, tariffs are proving to be a major source of revenue for the U.S. government. If the Supreme Court agrees with the appeals court, it may cause bond yields to rise even further and in turn put pressure on the stock market. The reason is the U.S. government will replace the tariff revenue with increased borrowing instead of cutting spending. Wall Street’s expectation is that the Supreme Court will rule in favor of the tariffs.
- In the middle of all of the foregoing negative developments, on the positive side, blind money will flow into the stock market today and tomorrow. Blind money is the money that flows into the stock market on the first two days of the month without any analysis or regard for market conditions.
- ISM Manufacturing Index will be released at 10am ET and may be market moving.
- It is important for prudent investors to pay attention to the Arora Protection Band.
- 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
In the early trade, money flows are negative in Amazon (AMZN), Nvidia (NVDA), Microsoft (MSFT), Alphabet (GOOG), Meta (META), Tesla (TSLA), and Apple (AAPL).
In the early trade, money flows are negative 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 ***. 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. Smart money is *** in the early trade.
For longer-term, please see gold and silver ratings.
Oil
Oil initially saw a jump on Ukraine attacking Russia’s energy facilities.
The momo crowd is *** in 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 selling.
Markets
Interest rates are ticking up, and bonds are ticking down.
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.
S&P 500 futures are trading at 6396 as of this writing. S&P 500 futures resistance levels are 6500, 6700, and 7000; support levels are 6256, 6131, and 6017.
DJIA futures are down 438 points.
Gold futures are at $3547, silver futures are at $41.24, and oil futures are at $64.67.
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.
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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.
