WEEKLY STOCK MARKET DIGEST: MOMO STOCK BUYING ON INFLATION HIGHEST SINCE 1982

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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.’

MOMO STOCK BUYING ON INFLATION HIGHEST SINCE 1982

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

Inflation Highest Since 1982

Please click here for a chart of the Consumer Price Index (CPI).

Note the following:

  • CPI data was released at 8:30 am ET. The chart shows the recent data.
    • Year over year CPI came at 6.8%. This is the highest inflation rate since June 1982.
    • Core CPI came at 4.9% year over year. This is the highest inflation rate since 1991.
    • Monthly CPI came at 0.8% vs. 0.6% consensus.
    • Monthly Core CPI came at 0.5% vs. 0.5% consensus.
  • In terms of interest rates, the federal funds effective rate in June  1982 was 14.15%.  Now it is near 0%.
  • The momo crowd is aggressively buying stocks on the news.  You may be wondering why are they buying on such bad news.  The answer is the narrative by momo gurus.
  • Momo gurus contend that the overhang is over and now it is time to buy.
  • Many investors make the mistake of thinking that the job of the momo gurus is to analyze the markets objectively and guide investors.  This could not be farther from the truth.  The sad reality is that the job of the momo gurus is to persuade investors to keep on buying no matter what the data is.

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 and bonds are range-bound.

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 $1787, silver futures are at $22.19, and oil futures are at $71.87.

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

 futures are up 186 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.

INITIAL JOBLESS CLAIMS FALL TO THE LOWEST LEVEL SINCE 1969

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

Lowest Claims Since 1969

See also  CPI AND PPI RALLY TEMPORARILY LOSING STEAM ON NET SUPPLY OF STOCKS

Please click here for a chart of initial jobless claims.

Note the following:

  • Initial Jobless Claims fell to 184,000 vs. 211,000 consensus.  This is an extremely good number.
  • The chart shows that the initial claims level is now lower than in 2019 before the pandemic. If that was not strong enough, the initial claims number is the lowest since 1969.
  • The momo crowd does not like the number as this means the Fed will be more likely to accelerate taper.  After all, the momo crowd has become so powerful because of money printing and government borrowing.
  • The momo crowd had been aggressively buying stocks to run the market to a new high.  Today’s excellent initial claims number is not helpful in running the market to a new high.
  • For the first time in a long time, the probability is rising that in the future the stock market may return to its normal instead of being driven by the momo crowd.  It is important for investors, especially newer investors, to start making a mind shift away from the recent abnormal market.  The more you understand the true nature of the market, the better you will do in the stock market.  The easiest way to understand the true nature of the market is to follow Arora’s 30 Laws of Investing and Trading.   Due to the high value, these laws are not public and available only to The Arora Report subscribers who attend the Bullet Proof Your Portfolio and Increase Your Returns seminar.  These laws are closely guarded to provide you with a major edge in the markets — keep in mind that anything that becomes public losses its edge.
  • All important CPI data will be released tomorrow morning at 8:30 am ET.  The consensus is 0.6%.  This translates to an annualized rate of 7.2% for inflation.  The consensus number is the highest since 1982.

Momo Crowd And Smart Money In Stocks

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

Gold

The momo crowd is 🔒.  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 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 $1777, silver futures are at $21.89, and oil futures are at $71.84.

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

 futures are down 106 points.

GOOD NEWS FROM PFIZER, WATCH SEMICONDUCTORS FOR MARKET DIRECTION

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

Good News

Please click here for a chart of semiconductor ETF ().

Note the following:

  • There is good news from Pfizer this morning. Three doses of the vaccine neutralize omicron in laboratory tests.
    • It is not known if this positive data from the lab will hold up in real life.
    • There are many cases of people with three doses being infected with omicron.
    • To understand the market behavior, investors should pay attention to the market reaction to the news.
      • Yesterday near the close, news came from South Africa that there was a 41 fold drop in the antibodys’ capacity to neutralize omicron compared with the original virus. This was a small study from 12 vaccinated people with two doses of vaccine.
      • The stock market initially pulled back on the news as this was bad news.
      • The momo crowd came rushing to buy the tiny dip.
      • After hours and through the night, the momo crowd was an aggressive buyer of stock futures because they perceived the bad news on vaccine would prompt the Fed to possibly not accelerate taper.
      • Earlier this morning, smart money started selling the strength in stock futures. The reasoning was twofold. First, the market had become overbought in the very, very short term.  Second, the smart money believes that the Fed will accelerate the taper irrespective of the virus.
      • Then came the good news from Phizer that three doses of vaccine neutralize omicron.
      • First, there was aggressive buying on the news, but since then, the market is pulling back on concerns about the Fed and upcoming inflation data.
    • The foregoing illustrates the push and pull that is going on in the stock market between the momo crowd and non-momo investors.  The two groups have very different perspectives here.
  • Given the push and pull, investors should consider watching semiconductors for the future direction of the stock market.
  • The chart shows that semiconductors have just traced a bullish pattern.
  • The chart shows that semiconductors closed above the prior high. Semiconductors are outperforming other groups.
  • The chart shows that the prior intraday high is nearby.
  • The chart shows that RSI for semiconductors is tracing a bullish pattern.
See also  WEEKLY STOCK MARKET DIGEST: STOCK MARKET REACHES TACTICAL PROFIT TAKING ZONE, POWELL’S FAVORITE INDICATOR PROVIDES NO RELIEF

Momo Crowd And Smart Money In Stocks

The momo crowd is 🔒 stocks.  Smart money is 🔒.

Gold

The momo crowd is 🔒.  Smart money is 🔒.

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

Oil

API showed a surprise crude draw of 3.089M barrels vs. consensus of a build of 2.093M barrels.

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 $1783, silver futures are at $22.38, and oil futures are at $72.20.

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

 futures are up 23 points.

MORE BUYING IN THE STOCK MARKET ON OMICRON OPTIMISM

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

Omicron Optimism

Please click here for a chart of  & 500 ETF () which represents the benchmark stock market index & 500 ().

Note the following:

  • Many people with the exception of the momo crowd in the stock market would agree that the world would have been better off without omicron. But the momo crowd has a different playbook.
  • The chart shows that based on the gain in the premarket, the stock market is now higher than it was on the day omicron news broke.
  • There is aggressive buying in the stock market on optimism over omicron. The market has concluded that omicron will slow down the Fed in tapering.  Money printing for longer means a higher stock market.
  • In our analysis, the conclusion by the stock market is premature.
  • The chart shows that during the omicron dip,  touched the top band of the support zone but did not dip into the support zone before rallying.  This is a positive.
  • The chart shows that RSI is on a buy signal.
  • Due to positive seasonality and optimism over omicron, the Santa Claus rally is bringing in more buying.

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 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 $1774, silver futures are at $22.26, and oil futures are at $71.43.

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

See also  WALL STREET FRONT RUNS BLIND MONEY IGNORING PELOSI TAIWAN VISIT, ECONOMIC CONTRACTION AND KASHKARI

 futures are up 306  points.

WALL STREET POSITIONING FOR SANTA CLAUSE STOCK MARKET RALLY

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

Positioning

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

Note the following:

  • It is important for investors to pay attention to Wall Street’s positioning. It is the positioning that often, in large part, determines the reaction to news.
  • Wall Street is positioning for a Santa Clause rally, especially in tech stocks.
  • The chart shows that  has pulled back into the support zone.
  • The chart shows that RSI is oversold. Oversold markets tend to bounce.
  • It is a seasonally positive period.
  • There are several hurdles in the way of a potential rally.
    • The news on omicron and delta.
    • Economic data may not be supportive. Most notable is CPI that will be released on December 10th.  The consensus is 0.6% or an annualized inflation rate of 7.2%.  Paradoxically, expectations for inflation are so high that if the data comes better than the consensus, it can spark a big rally in the stock market.
    • The Fed will meet on December 14 – 15.  Typically the momo crowd buys ahead of the Fed meeting in anticipation of the Fed continuing to print money.  However, this time is different.  Powell has indicated that the Fed may accelerate taper.  If the Fed is more hawkish than expected, expect the market to tumble. On the other hand, if the Fed does not accelerate taper, expect a vicious rally to the upside.
    • Smart money is shifting from expensive stocks to less expensive stocks.  However, the momo crowd mostly likes to buy expensive stocks.

Bitcoin

Bitcoin crashed on Saturday apparently on forced selling on margin calls.  Since then bitcoin has been recovering but is still below $50,000.

Momo Crowd And Smart Money In Stocks

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

Gold

The momo crowd is 🔒.  Smart money is 🔒.

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

Oil

Saudia Arabia is set to increase prices for the U. S. and Asia.

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 $1781, silver futures are at $22.32, and oil futures are at $68.03.

S&P 500 futures resistance levels are 4600, 4713, and 4770: support levels are 4460, 4400, and 4318.

 futures are up 276 points.

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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.

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