CENTRAL BANK GOLD BUYING AT THE HIGHEST SINCE 1967, NONSENSICAL STOCK BUYING ON HOTTER JOBS REPORT

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By Nigam Arora & Dr. Natasha Arora

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

Hotter Jobs Report

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 there is buying in the early trade.  The buying in stocks is occurring after the release of the jobs report.
  • The jobs report is hotter than expected.  Here are the details:
    • Non-farm private payrolls came at 233K vs. 225K consensus.
    • Non-farm payrolls came at 261K vs. 220K consensus.
    • Unemployment rate came at 3.7% vs. 3.6% consensus.
    • Average work week came at 34.5 vs. 34.5 consensus.
    • Average hourly earnings rose 0.4% vs. 0.3% consensus.
    • The labor force participation rate is 62.2%.
  • The jobs report shows that the economy is still robustly creating jobs.  Of concern is that wages are still rising.
  • The jobs report shows that Powell was right in his stance.
  • In theory, the market should have gone down on the stronger jobs report because it means the Fed is on the right track to keep on raising rates.
  • The momo crowd is aggressively buying stocks on the hotter jobs report.  Such buying goes against momo gurus’ own thesis and is nonsensical.  Momo gurus’ thesis behind buying stocks is that the economy is weak and it will cause the Fed to pivot.
  • Why is the momo crowd buying?  We have previously shared with you that periodically the momo crowd gets in the mode of buying when there is news, irrespective of the news.  This morning is one of those times.

China

In Hong Kong, stocks jumped 5.4% on reports that inspectors from the U.S. Public Company Accounting Oversight Board have completed their work in China about two weeks ahead of schedule.  There are also rumblings about reopening.  China appears to be reducing penalties for airlines for bringing virus cases to China.

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There are also reports that China is thinking of buying mRNA vaccine technology from BNTX.

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 World Gold Council reported gold buying by central banks is the highest it has been since 1967.  Gold is often used as an inflation hedge.  Turkey’s central bank was one of the largest buyers as inflation in Turkey surges to 85%.

Gold prices in the third quarter are down 8% in part because of selling in gold backed ETFs as interest rates and the dollar rise.  Gold is priced in dollars.  When the dollar rises, the price of gold goes down.

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 is running up on news from China.  Please see the China section.

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 is holding above $20,000.  Bitcoin is controlled by whales.  The whales are trying to demonstrate that the bottom is in.

Markets

Our very, very short-term early stock market indicator is 🔒 but can quickly turn 🔒.  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.

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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 $1665, silver futures are at $20.38, and oil futures are at $92.19.

S&P 500 futures resistance levels are 3860, 3950, and 3860: support levels are 3630, 3600, and 3520.

DJIA futures are up 371 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 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 band 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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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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