By Nigam Arora
To gain an edge, this is what you need to know today.
Gold Soars
Please click here for a chart of gold ETF (GLD).
Note the following:
- The chart shows gold is soaring to a new high.
- The chart shows zone 1 (resistance) is the magnet.
- The chart shows zone 2 (support) is not far below.
- RSI on the chart shows gold is overbought and vulnerable to a pullback. More importantly, RSI is showing a divergence. A divergence often foretells a pullback unless there is macro news.
- Prudent investors should note the following:
- This leg up in gold is being primarily driven by investors new to gold. Most of these new investors have never owned gold before and have traditionally been crypto buyers and part of the stock market momo crowd.
- Investors new to gold are blindly buying, attracted by the magnet shown as zone 1 on the chart.
- In contrast to investors new to gold, long time members of The Arora Report are long gold from the cycle lows near $1000. Newer members to The Arora Report also have very large gains on gold as they bought gold in the Arora buy zones.
- Gold ETF (GLD) is in the ZYX Allocation Model Portfolio, and silver ETF (SLV) and gold miner Newmont (NEM) are in the ZYX Buy Core Model Portfolio. All three positions have large gains.
- The Arora Report ratings on silver and gold have consistently been spot on for the last 18 years. The Arora Report’s gold ratings are used by individual investors, money managers, hedge funds, bullion dealers, and jewelers all across the globe. The Arora Report’s gold ratings are accessible from the main menu in the Real Time Feed.
- It appears that investors who have been buying gold all along are no longer buying gold. This pattern is similar to the pattern seen in 2011. After giving repeated signals to back up the truck and buy gold when gold was in the $600 range, in 2011 when gold reached $1904, The Arora Report gave a signal to sell 50% of the gold position and put a stop on the remaining 50% at $1857. Gold topped the same day the Arora sell signal was given. Gold subsequently fell close to $1000.
- As investors new to gold rush to buy gold, gold ETFs, and gold futures, they are oblivious that the demand for physical gold is weakening, especially in India and China. India and China are the biggest consumers of physical gold. From our sources, physical gold is being sold at as much as a $40 discount due to weak demand.
- The rise in gold this morning is being triggered by fears that the U.S. government will shut down. In contrast to gold, stock market investors are not concerned about the possible government shutdown.
- Here is what prudent investors need to know about the possible government shutdown:
- Historically, Democrats and Republicans reach a deal at the last minute.
- In The Arora Report analysis, if the stock market drops on a government shutdown, it will be a buying opportunity.
- This is the end of the quarter. This morning, window dressing related buying in the stock market is very aggressive. In window dressing, some money managers buy the best performing stocks of the quarter and sell the weakest stocks of the quarter. The purpose is to show their clients in the quarter end reports that they were holding the best performing stocks.
- In The Arora Report analysis, prudent investors should not get carried away with window dressing buying because quarter end rebalancing is ahead. Further, in The Arora Report analysis, quarter end rebalancing will result in selling stocks by those who are rebalancing.
- In a sign of the times, the largest buyout by private equity ever has just taken place.
- The buyout is of video game maker Electronic Arts (EA) for $55B. The Arora Report had identified EA as a buyout target a long time ago. EA is in the ZYX Buy Core Model Portfolio, long from $20.74. This represents a gain of 913% for members of The Arora Report. EA is the 212th Arora Portfolio company to be bought out.
- The prior largest buyout was for $45B for Texas power company (TXU) in 2007. The stock market crashed in 2008.
- In 2007, sentiment was extremely positive and liquidity was very high, just as it is now in 2025.
- 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
Most portfolios are now heavily concentrated in the Mag 7 stocks. For this reason, to get ahead and get an edge, investors need to dig below the surface of the Mag 7 stocks. It is equally important to rise above the noise of daily news on the Mag 7 stocks. The best way to get an edge, dig below the surface, and rise above the noise of the daily news is to pay attention to early money flows in the Mag 7 stocks on a daily basis. When there is significant news in the Mag 7 stocks that rises above the threshold of noise and impacts your entire portfolio, it is covered in the main section above.
In the early trade, money flows are positive in Amazon (AMZN), Nvidia (NVDA), Microsoft (MSFT), Alphabet (GOOG), Meta (META), and Tesla (TSLA).
In the early trade, money flows are neutral in Apple (AAPL).
In the early trade, money flows are positive 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
There are rumors that OPEC+ will increase production by 137K barrels. This is bearish for oil.
The momo crowd is *** oil in the early trade. Smart money is *** oil in the early trade.
For longer-term, please see oil ratings.
Bitcoin
Bitcoin (BTC.USD) is range bound.
Markets
Interest rates are ticking down, and bonds are ticking up.
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.
S&P 500 futures are trading at 6733 as of this writing. S&P 500 futures resistance levels are 6780, 7000, and 7200 : support levels are 6500, 6256, and 6131.
DJIA futures are up 204 points.
Gold futures are at $3843, silver futures are at $46.85, and oil futures are at $64.53.
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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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.
