By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
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 chart shows that the stock market is consolidating below the mini resistance zone.
- RSI on the chart shows that the stock market can go either way.
- Stock market bulls had pinned their hopes on this morning’s jobs report, also known as the mother of all reports, to break above the mini resistance zone.
- Stock market bulls were hoping for a weak report, reasoning that a weak report could force the Fed to cut interest rates.
- Stock market bulls are pricing in five rate cuts in 2024.
- Instead of a weak report, the jobs report came hotter than expected. Here are the details:
- Non-farm payrolls came at 199K vs. 175K consensus.
- Non-farm private payrolls came at 150K vs. 155K consensus.
- Unemployment rate came at 3.7% vs. 3.9% consensus.
- Average work week came at 34.4 vs. 34.3 consensus.
- Average hourly earnings came at 0.4% vs. 0.2% consensus.
- In The Arora Report analysis, the most important statistic here is the drop in the unemployment rate. Stock market bulls were hoping for an increase in the unemployment rate.
- The jobs report throws cold water on bulls’ thesis of five rate cuts next year.
- First, stock and bond futures dipped on the jobs report, and the dollar became stronger.
- Second, momo gurus quickly moved to contain the damage by spreading a three part narrative.
- This jobs report will be revised lower later on. In The Arora Report analysis, this is pure conjecture as nobody really knows.
- Future jobs reports will be weaker. Again, in The Arora Report analysis, this is conjecture as nobody really knows.
- Ignore the jobs report and buy stocks because of artificial intelligence.
- So far, momo gurus’ narrative has succeeded. As of this writing, stock futures have regained all of their losses.
- In The Arora Report analysis, the most important factor driving the stock market is not any data but the market mechanics of year end chase, positioning, and 0DTE options. Market mechanics are powerful. About two thirds of the rally in the stock market this year is due to market mechanics. Due to their high value, Wall Street professionals keep knowledge of market mechanics close to the chest. You can gain a big edge by learning about market mechanics. The easiest way to learn market mechanics is to listen to the podcasts in Arora Ambassador Club.
- As an actionable item, the sum total of the foregoing is in the protection band, which strikes the optimum balance between various crosscurrents. Please scroll down to see the protection band.
Magnificent Seven Money Flows
In the early trade, money flows are positive in Nvidia (NVDA), Microsoft (MSFT), Alphabet (GOOG), and Apple (AAPL).
In the early trade, money flows are negative in Meta (META), Amazon (AMZN), and Tesla (TSLA).
In the early trade, money flows are mixed in S&P 500 ETF (SPY) and Nasdaq 100 ETF (QQQ).
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 *** the rally from the lows in the early trade.
Gold
Gold futures first fell on the jobs report, but the momo crowd *** the dip. Smart money is *** in the early trade.
For longer term, please see gold and silver ratings.
Oil
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
Bitcoin (BTC.USD) is levitating about $43,000.
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 $2038, silver futures are at $23.98, and oil futures are at $71.05.
S&P 500 futures are trading at 4584 as of this writing. S&P 500 futures resistance levels are 4600, 4713, and 4770: support levels are 4460, 4400, and 4318.
DJIA futures are down 63 points.
Protection Band And What To Do Now
It is important for investors to look ahead and not in the rearview mirror.
Consider continuing to hold good, very long-term, 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.
Traditional 60/40 Portfolio
Probability based risk reward adjusted for inflation does not favor long duration strategic bond allocation at this time.
Those who want to stick to traditional 60% allocation to stocks and 40% to bonds may consider focusing on only high quality bonds and bonds of seven year duration or less. Those willing to bring sophistication to their investing may consider using bond ETFs as tactical positions and not strategic positions at this time.
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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.
