By Nigam Arora & Dr. Natasha Arora
Weekly Digest from The Arora Report is popular among serious investors and money managers because they have found studying insights from the prior week gives them an edge over the coming weeks. Here is the day by day rundown from the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers of The Arora Report.
Please scroll down for the section ‘Protection Bands and What To Do Now.’
TRILLIONS OF FREE MONEY OVERCOME THE FEAR OF INFLATION
To gain an edge, this is what you need to know today.
Free Money Overcomes The Fear
Please click here for a chart of S&P 500 ETF (SPY) which represents the benchmark stock market index S&P 500 (SPX).
Note the following:
- The chart shows that the market has pulled back to the low band of the channel on inflation fears.
- The trillions of free money as a consequence of Powell and Biden’s policies is overcoming the fear of inflation.
- Our analysis shows that supply chain disruptions are only a small part of the rise in inflation. If the demand was only slightly above the level before the free money started flowing, nobody would be talking about supply chain disruptions.
- The real issue is high demand due to free money.
- Don’t be fooled — the popular narrative of supply chain issues is messaging by the politicians to deflect away from the real issue of free money.
- In the long term, there will likely be serious consequences of the free money for investors. However, in the short term, the free money is likely to keep on driving the stock market higher.
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
California gasoline prices reached the highest level in history.
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 $1852, silver futures are at $25.11, and oil futures are at $79.89.
S&P 500 futures resistance levels are 4713 and 4900: support levels are 4600, 4460, and 4400.
DJIA futures are up 134 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.
LAST TIME INFLATION WAS THIS HIGH, INTEREST RATES WERE 8%
To gain an edge, this is what you need to know today.
Stock Market Overvaluation
Please click here for a chart of the 10- year Treasury yield.
Note the following:
- Yesterday we shared with you that the last time inflation was this high was in October 1990.
- The chart shows that the 10-year Treasury yield was over 8% at that time.
- The chart shows that the Treasury yield now is 1.55%.
- Hypothetically if interest rates were around 8% now, what would happen to the stock market? The answer is the stock market would lose 50 – 70% of its value.
- The interest rates are so low now because of extensive manipulation by the Fed. As a prudent investor, you need to understand why the Fed is manipulating so extensively. For those interested in next level information, we will soon release a podcast on the subject for Arora Ambassador Club members.
Low Liquidity
Today is the Veterans Day holiday. The bond market is closed. Banks are also closed. The liquidity is low making it easier for speculators to move the market.
Momo Crowd And Smart Money In Stocks
The momo crowd is 🔒 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.
The bond market is closed.
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 $1864, silver futures are at $25.21, and oil futures are at $80.91.
S&P 500 futures resistance levels are 4713 and 4900: support levels are 4600, 4460, and 4400.
DJIA futures are up 18 points.
HIGHEST INFLATION SINCE 1990 — GOLD JUMPS
To gain an edge, this is what you need to know today.
HIghest Inflation Since 1990
Please click here for a chart of the Core Producer Price Index (CPI).
Note the following:
- CPI came at 0.9% vs. 0.6% consensus. This is an annualized inflation rate of 10.8%.
- CPI year over year rose 6.2% vs. 5.9% consensus.
- Core CPI which takes out food and energy came at 0.6% vs. 0.4% consensus.
- Core CPI year over year rose at 6.2% vs. 4.0% consensus.
- This is the highest inflation rate since October 1990.
China
China factory gate inflation came at 13.5%. This is the highest rate since 1995.
Jobless Claims
Initial Claims came at 267K vs. 265K consensus.
Momo Crowd And Smart Money In Stocks
The momo crowd is 🔒 stocks in the early trade. Smart money is 🔒.
Gold
Gold has been left for dead in favor of bitcoin. However today after the inflation number, money is rushing into gold.
The momo crowd is 🔒 gold in the early trade. Smart money is 🔒.
For longer-term, please see gold and silver ratings.
Oil
API showed a crude oil draw of 2.485M barrels vs. a build of 1.90M barrels consensus.
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 $1851, silver futures are at $24.65, and oil futures are at $84.31.
S&P 500 futures resistance levels are 4713 and 4900: support levels are 4600, 4460, and 4400.
DJIA futures are down 91 points.
FED IS WARNING OF ‘PERILOUS CRASHES’
To gain an edge, this is what you need to know today.
Perilous Crashes
Please click here for a chart of Nasdaq 100 ETF (QQQ).
Note the following:
- The chart shows that after the rare occurrence of RSI reaching 100, RSI is still levitating at 97.24. The market is very overbought.
- We have previously shared with you that the reason is the convergence of various positive factors. November tends to be the best month of the year for the stock market.
- In an 85 page report, released minutes after the market close, the Fed is warning that as asset prices keep rising, they are prone to perilous crashes.
- “Asset prices remain vulnerable to significant declines should investor risk sentiment deteriorate, progress on containing the virus disappoint, or the economic recovery stall,” the Fed said.
- Ironically, the reason that the market has become susceptible to perilous crashes is, in large part, due to the Fed continuing to pursue its policies of money printing and near-zero interest rates.
- The report shows that the Fed is fully aware of the very high risk high wire act that the Fed is pursuing.
- The momo and meme crowds are oblivious to the risk that the Fed itself is now admitting.
- Prudent investors are asking, “Why is the Fed pursuing such a high risk policy?” For those interested in protecting the wealth they have accumulated and learning the next level of information, we have prepared a podcast titled ‘The dirty secret of the president and the Fed chair you need to know.’ The podcast will be available soon to the Arora Ambassador Club members.
Producer Price Index
PPI came at 0.6% vs. 0.6% consensus.
Core PPI came at 0.4% vs. 0.4% consensus.
Put Call Ratio Crashing
The put call ratio is crashing. This is one of the factors that goes into our proprietary sentiment measurement. Sentiment is in the extreme positive.
Momo Crowd And Smart Money In Stocks
The momo crowd is 🔒 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 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 $1829, silver futures are at $24.44, and oil futures are $82.43.
S&P 500 futures resistance levels are 4713 and 4900: support levels are 4600, 4460, and 4400.
DJIA futures are down 37 points.
BUFFETT’S CASH HOLDINGS HIT A RECORD $149 BILLION — WHAT DOES BUFFETT KNOW?
To gain an edge, this is what you need to know today.
What Does Buffett Know?
Please click here for a chart of Berkshire Hathaway (BRK-B).
Note the following:
- Warren Buffett is the most successful investor of our time.
- Buffett’s company Berkshire just reported that its cash holdings hit a record $149.2 billion.
- What does Buffett know that Wall Street is missing? Buffett is holding record cash at a time when the stock market is hitting new highs.
- The chart shows that since May Berkshire stock has been rangebound. Berkshire has been buying its own stock. Considering the amount of cash that Buffett is holding, he could have easily bought even more shares and run up his stock like many other companies are doing. Buffett clearly decided not to do so.
- Apple (AAPL) is a large holding of Berkshire. Buffett could have chosen to substantially increase his position in Apple to use more of his cash holdings. But he clearly chose not to do so.
- Buffett is known for buying large companies. Buffett clearly chose not to do so.
- The inference is Buffett thinks the stock market valuations are too high and there is more risk than generally anticipated.
Infrastructure Bill
Congress has passed the infrastructure bill.
Tesla
Elon Musk conducted a Twitter poll asking if he should sell 10% of his Tesla (TSLA) stock. Twitter voted ‘yes.’ This is a clever move on Musk’s part to cushion the potential fall in the stock. He may have decided to sell the stock to pay the taxes on the option exercise instead of borrowing money to pay taxes.
The observation here is that Tesla stock is down only 5%. If it was not for the speculative bubble in this market, the stock would have been down 25 – 30%.
This indicates that the speculative bubble is not likely to bust in the near term.
Crypto — $3 Trillion
The total capitalization of cryptocurrencies has now reached $3 trillion.
Momo Crowd And Smart Money In Stocks
The momo crowd is 🔒 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 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 $1822, silver futures are at $24.36, and oil futures are $81.75.
S&P 500 futures resistance levels are 4713 and 4900: support levels are 4600, 4460, and 4318.
DJIA futures are up 150 points.
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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.
