By Nigam Arora & Dr. Natasha Arora
Houthi Attack UAE
Note the following:
- Investors need to understand the impact of geopolitics on their portfolios.
- For a while, it has been mostly calm on the geopolitical front, but that may not last.
- Houthis control Yemen.
- Houthis are aligned with Iran.
- Iran is flexing its muscle to persuade the U.S. to lift sanctions.
- Houthis attacked the United Arab Emirates with missiles and drones. The attack set off explosions and killed three people near the airport in Abu Dhabi.
- Why should you care about any of the foregoing?
- The chart shows that oil has moved up as a result of the attack since the attack is in the oil rich region.
- Higher oil results in higher inflation.
- Higher inflation puts pressure on the Fed to raise rates.
- Higher rates are negative for tech stocks, especially long duration speculative stocks.
- Interest rates are rising.
- Tech stocks are falling.
- The chart shows that oil is experiencing a solid move after the breakout.
- The chart shows divergence in RSI. This indicates the probability of a pullback in the short term is high.
- Investors should be aware the ETF USO exhibits significant tracking error.
Momo Crowd And Smart Money In Stocks
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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 $1817, silver futures are at $23.50, and oil futures are $84.42.
S&P 500 futures resistance levels are 4713, 4770, and 4826: support levels are 4600, 4460, and 4400.
DJIA futures are down 302 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.
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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