WEAKER ISM DATA PROVIDES MOMO CROWD WITH A NEW NARRATIVE TO BUY STOCKS

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

Weaker 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:

• The chart shows the market opened lower in the premarket on the oil news.
  • Please click here for a day chart of oil futures.  For details, please see the Morning Capsule.
• Oil futures jumped Sunday evening on OPEC+ news.  However, SPY does not trade on Sundays, so when it opened at 4:30am ET there was selling pressure.
• After the open of the regular session, buying came in from those in the retail momo crowd who were oblivious to the oil news and were buying based on momentum from last week.
• The chart shows when ISM Manufacturing Index was released.  This is a leading indicator, and it carries heavy weight in our adaptive ZYX Asset Allocation model with ten categories of inputs.
  • ISM Manufacturing Index came at 46.3% vs. 47.5% consensus.
  • The ISM data indicates that manufacturing activity will slow in the near future.
• In the Morning Capsule we wrote:

The reason is that tech stocks have run up on a momo guru narrative that the Fed would be cutting interest rates by about 100 basis points in 2023.  If higher oil prices are sustained, it is difficult to see the Fed cutting interest rates.  Expect momo gurus to come up with a new reason to buy tech stocks.

• The ISM data has given momo gurus a new narrative to persuade their followers to buy stocks.
• The new momo guru narrative is that an increase in oil prices will increase the chance of a recession and a recession is deflationary – the reason to buy stocks now is because of the deflationary aspect of a recession potentially triggered by high oil prices.
  • You may recall that the same gurus were saying that there will not be a recession and that was the reason to buy stocks.
• As of this writing, buying is coming in by mutual funds, ETFs, and money managers who are trying to invest the blind money that poured in this morning.
• 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 is mixed.

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 buy 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

Markets can generate substantial wealth for knowledgeable investors. NOW YOU TOO CAN ALSO SPECTACULARLY SUCCEED AT MEETING YOUR GOALS WITH THE HELP OF THE ARORA REPORT. You are receiving less than 2% of the content from our paid services. …TO RECEIVE THE REMAINING 98% INCLUDING MANY ATTRACTIVE INVESTMENT OPPORTUNITIES, TAKE A FREE TRIAL TO PAID SERVICES.

Please click here to take advantage of a FREE 30 day trial.

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.