Momo Gurus Spooked

Please click here for a chart of  Nasdaq 100 ETF ().

Note the following:

  • There is a selloff going on in the early trade as momo gurus are spooked.
  • The chart shows that yesterday momo crowd ran up  higher than where it was before omicron news.  Momo gurus decided that omicron was a good event for the stock market because it would mean more help from the Fed.
  • In yesterday’s Morning Capsule, we shared with you that the reasoning of the momo crowd gurus to buy the dip could be summed up in one sentence —

stocks went up on delta, and for this reason, they will go up on omicron.

  • As a counter to momo gurus’ analysis, we shared with you our analysis. Here was one of the key points:

The Fed may not want to recklessly print money as they have done in the past.

  • Yesterday we shared with you that Powell would be testifying today in front of Congress.  The prepared text of Powell’s testimony has been released.
  • The prepared text is spooking momo gurus because Powell is not rushing to help them with money printing and liquidity like Powell did when delta came along.
  • In the text, Powell admits that he has been wrong about inflation.
  • Powell is now concerned about inflation.  The momo gurus do not like this concern about inflation because this means less money printing.
  • Yesterday early morning before the market opened, most  and   CEOs said that current vaccines would be less effective against omicron. The market did not care and it ran up.
  • This morning, the less informed in the media are saying that the market is being sold today because  CEO said that the current vaccine would be less effective.  This reason for the market going down this morning is obviously wrong as this was known yesterday before the market opened.
  • As expected, antibody cocktails from  and  are less effective against omicron.
  • We will be carefully listening to Powell Q&A.  It is likely that the prepared text was finished before omicron news and the momo gurus are misreading it.
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Momo Crowd And Smart Money In Stocks

The momo crowd is 🔒 (To see the locked content, please take a 30 day free trial)  in the early trade.  Smart money is 🔒.

Gold

The momo crowd is 🔒 gold in the early trade.  Smart money is 🔒.

For longer-term, please see gold and silver ratings.

Oil

The momo crowd is 🔒 oil in the early trade  Smart money is 🔒.

For longer-term, please see oil ratings.

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 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.

Gold futures are at $1798, silver futures are at $22.92, and oil futures are at $67.66.

S&P 500 futures resistance levels are 4713, 4770, and 4900: support levels are 4600, 4460, and 4400.

 futures are down 306  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 short-term bond funds 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.

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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.