By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
Excellent Jobs Report
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 Jobs Report is excellent. It is shockingly better than the predictions of the momo gurus. It is even better than the predictions of non-momo gurus. Here are the details:
- Nonfarm Payrolls came at 528K vs. 258K consensus.
- Nonfarm Private Payrolls came at 471K vs. 200K consensus.
- The unemployment rate came at 3.5% vs. 3.6% consensus.
- Average Work Week came at 34.6 vs. 34.5 consensus.
- Average Hourly Earnings 0.5% vs. 0.3% consensus.
- Smart money is selling stocks on the news.
- The chart shows that the stock market has run up on the momo gurus’ narrative that the Fed will stop fighting inflation, stop raising rates, and rate cuts are not far away.
- The chart shows that RSI is overbought. When RSI is overbought the market is vulnerable to a pullback.
- The Jobs Report shows that the momo narrative is shockingly wrong. Will momo gurus admit that they were wrong and change their narrative? There is no chance of them admitting that they were wrong. Expect them to come up with a new narrative to try to run up the market even higher.
- Consider not falling for the momo gurus narrative. Instead, consider watching the data.
- There is no change in the game plan previously given. Here is the game plan again for your convenience.
The Game Plan
Here are the key points of the game plan.
Historically the stock market is weak in September and October in a midterm election year.
Historically the market runs up after the election going into the year-end.
The plan continues to be to take full or partial profits on tactical positions that were recently initiated based on individual preference and the rest of the portfolio, in the profit-taking zone shown on the chart.
The plan is to continue to hold good long term positions.
The plan is to buy tactical positions again if and when the market pulls back.
For those who can handle short term trades, the plan is to continue to undertake short term trades both on the long and short sides as good setups develop.
The plan is to not fall into the trap of FOMO (fear of missing out).
The plan is to start or add to very long term positions when the data justifies such action based on probablity-adjusted risk rewards.
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 🔒 stocks in the early trade.
Gold is being 🔒 on the strong jobs report.
The momo crowd is 🔒 gold in the early trade. Smart money is inactive in the early trade.
For longer-term, please see gold and silver ratings.
The momo crowd is 🔒 oil in the early trade. Smart money is 🔒 oil in the early trade.
For longer-term, please see oil ratings.
Bitcoin is being bought this morning.
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 $19.52, and oil futures are at $88.08.
S&P 500 futures resistance levels are 4200, 4318, and 4400: support levels are 4000, 3950, and 3860.
DJIA futures are down 207 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 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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