By Nigam Arora & Dr. Natasha Arora

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

Interest Rates Rise

Please click here for a chart of  7 – 10 year Treasury bond ETF (IEF).

Note the following:

  • The yield on 10-year Treasuries reached 1.613% on Friday.
  • Bonds move inverse to interest rates.
  • The chart is of ETF IEF as many investors find it easier to watch this ETF.
  • The chart shows that the ETF IEF is at the top band of the support zone.
  • Interest rates have been rising because the bond market knows that the Fed has been wrong on inflation.
  • Earlier in the morning, stock futures were falling and significant selling was coming into the stock market on concerns that the Fed has been wrong and may be boxed.
  • As the morning has progressed, the momo crowd bought the slightest dip and is continuing to buy as of this writing.

Chinese Tech Equities

The momo crowd is also buying Chinese tech stocks.  The trigger is that China fined the food delivery company Meituan less than expected on antitrust issues.  The fine was 3% of sales compared to the 4% previously levied on BABA.

Coal Futures Reach A Record

In China, coal futures reached a record high.  In some places in China, electricity is being rationed due to coal shortages.

India is running out of coal to power its electric plants.

Europe is having a severe natural gas shortage.

All of the foregoing is spilling into higher oil prices.  Oil is being substituted for other fuels.

The concern is that fuel shortages will increase inflation and reduce global growth.

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 🔒.

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 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 $1752, silver futures are at $22.50, and oil futures are $80.86.

S&P 500 futures resistance levels are 4400, 4460, and 4600: support levels are 4318, 4200, and 4000.

DJIA futures are down 26 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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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.