SMART MONEY IN THE STOCK MARKET TAKES THE HINT FROM ISM DATA, MOMO CROWD IGNORES

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

ISM Data

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:

• In the Morning Capsule, we wrote:

• ISM Manufacturing Index will be released at 10am ET.  This data has the potential to move the markets.

• The concern about the ISM data has brought selling into the strength generated by China PMI.  Without the excellent China PMI number, this morning the stock market would have likely been down several hundred DJIA points.

• The chart shows when the ISM Manufacturing Index data was released.
• ISM Manufacturing came at 47.7% vs. 47.8% consensus.  This is in line with estimates.
• However, at The Arora Report, when we look below the surface, the prices paid component of the index came at 51.3.  That is a 5-month high.  Last month, the prices paid component of the index came at 44.5. Looking forward, this piece of data indicates prices are likely to go up.
• The momo crowd ignored the key piece of data from ISM Manufacturing and the increased likelihood of price increases and bought the dip in the stock market, as is the momo crowd’s pattern.
• Smart money, on the other hand, sold stocks when ISM was released.
• The yield on 10-year Treasury bonds has crossed 4% as of this writing.
• The data released in February and today suggests a high probability of stagflation.
• For a while, The Arora Report has shared with you that there is a high probability of stagflation.  It is important that all investors understand stagflation and how different stocks behave in stagflation.  To help investors gain next-level knowledge, there is a five-part podcast series on how Warren Buffett’s holdings will behave in a stagflationary environment.  The podcast series is available in the Arora Ambassador Club.
• The VUD indicator is the most sensitive measure of net supply demand in real-time. The orange represents net supply and the green represents net demand.
• The VUD indicator has turned orange, indicating net supply of stocks.

Money Flows

The momo crowd money flows since the Morning Capsule are 🔒 (To see the locked content, please take a 30 day free trial).

Smart money flows since the Morning Capsule are 🔒.

Short squeeze money flows are 🔒.

A Special Note To New Subscribers

Note the smart money behavior.  Smart money tends to sell into strength on strong up days.

New subscribers should consider adopting smart money’s way of investing and trading.

Sentiment

Sentiment is 🔒.

Sentiment is a contrary indicator at extremes.  In plain English, this means that when sentiment becomes extremely positive it is time to sell and when sentiment becomes extremely negative it is time to buy.

Close

There appear to be sell on close orders.

There is merit to watching the pattern of market on close orders as they represent the day’s dominant net cumulative activity by many professionals and funds.

Gold

The momo crowd money flows in gold are 🔒 since the Morning Capsule.

Smart money flows are 🔒 in gold since the Morning Capsule.

Oil

The momo crowd money flows in oil are 🔒 since the Morning Capsule.

Smart money flows in oil are 🔒 since the Morning Capsule.

Buy Zones And Buy Now Ratings

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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.