By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
Market Moving Data Ahead
Please click here for a chart of Nasdaq 100 ETF (QQQ).
Note the following:
- Significant market moving data is ahead this week. Start out by understanding stock market technicals going into the important data.
- The chart shows that Nasdaq 100 ETF QQQ has fallen below the low band of the support zone this morning. This is a negative.
- The chart shows that in the early trade QQQ is lifting from the lows on heavy momo buying. This is a positive in that the momo crowd continues to buy the dip.
- The chart shows that RSI is now oversold. This indicates that the slightest good news in the data can cause a rip roaring rally.
- Here is the important data ahead.
- CPI will be released tomorrow. The consensus is 1.2%. The consensus for Core CPI is 0.5%. This is the most important piece of data.
- More important than the data itself will be the reaction in bonds, gold, and stocks.
- PPI will be released on Wednesday. The consensus is 1.2%. The consensus for the Core PPI is 0.5%.
- Retail Sales will be released on Thursday. The consensus is 0.6%. Consensus ex-auto is 0.9%.
- Lately, there is a divergence between consumer sentiment and what consumers are actually doing. Consumer sentiment is negative, but consumers continue to buy. Normally, both of these data points move in the same direction. The current behavior is an abnormal behavior. Whichever direction it resolves will make a big difference to the stock market.
- Initial claims will be released on Thursday. The consensus is 175K.
- CPI will be released tomorrow. The consensus is 1.2%. The consensus for Core CPI is 0.5%. This is the most important piece of data.
- Earnings season is ahead. More important than earnings will be the reaction to earnings. Important earnings this week include KMX, DAL, FAST, JPM, ALLY, C, GS, MS, TSM, UNH, and WFC.
- What should you do now before this all important data is released? Consider following the guidance in the “Protection Band And What To Do Now” section below.
- Please also pay attention to the post last night on buy zones.
Relief In France
There is relief in the financial markets in Europe after Macron did better than Le Pen in France. This is important to the world because Le Pen wants French armed forces to be removed from NATO command.
China Lockdown
There was aggressive selling in the Chinese stock market on COVID lockdowns.
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
Interest rates are spiking this morning. Gold should have gone down on spiking interest rates, but instead, it is ripping higher. Gold is exhibiting abnormal behavior. When an asset class exhibits abnormal behavior, you should pay attention because it often leads to opportunities. For those desiring next-level information on this behavior, a podcast titled “Gold: A Remarkable Reaction to Interest Rates” will go live shortly.
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 prices took another dive down on the China lockdowns.
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 was supposed to rally after the Miami conference, but instead, it is selling off. The reason is, as we have been sharing with you, bitcoin has become correlated with aggressive speculative stocks. Aggressive speculative stocks are being sold in the early trade as interest rates spike higher.
Markets
Our very, very short-term early stock market indicator is 🔒. Short squeezes ahead of an important number like CPI tomorrow are common. 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 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 $1970, silver futures are at $25.53 and oil futures are $93.93.
S&P 500 futures resistance levels are 4460, 4600 and 4713: support levels are 4400, 4318 and 4200.
DJIA futures are down 141 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 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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This post was just published on ZYX Buy Change Alert.
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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.
