By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
Extraordinary Behavior
Please click here for a chart of the dollar index (DXY).
Note the following:
- The chart also shows gold ETF (GLD), Japanese currency yen ETF (FXY), S&P 500 ETF (SPY), and JPMorgan (JPM).
- The chart shows that the dollar index has fallen below the psychologically important level of 100.
- Unlike stocks, the dollar normally does not move as much as it has recently as shown on the chart. This move in the dollar is extraordinary.
- The chart shows the move in SPY when President Trump paused reciprocal tariffs. It was one of the strongest moves ever. U.S. investors loved the pausing of the tariffs.
- The chart shows that as the dust settled, foreigners dumped the dollar and bought gold and yen. Yen ETF FXY and gold ETF GLD are in the ZYX Allocation Model Portfolios.
- As a member of The Arora Report, you were ahead of the curve. We previously shared with you that foreigners were not only selling the dollar but also selling U.S. Treasuries. From yesterday’s Morning Capsule:
In the Arora Report analysis, the selling in the dollar and bonds appears to be coming from foreigners.
- Normally in periods of stress, like now, foreigners buy the dollar and U.S. Treasuries. The behavior of foreigners this time is extraordinary. Prudent investors want to know why foreigners are behaving contrary to the way they have historically behaved.
- Change has unintended consequences. Little did anyone know that when President Trump paused tariffs, foreigners would start dumping the dollar. Those who want next level information on the unintended consequences of change may consider reading the book titled “Theory ZYX of Successful Change Management: A Definitive Guide to Reach the Next Level” by Nigam Arora.
- In The Arora Report analysis, there are two reasons why foreigners are dumping the dollar and U.S. Treasuries.
- The quick reversal on tariffs sent an unintended message to foreigners that the U.S. is unreliable.
- Irrespective of the public reasons given for the quick reversal, foreigners were not fooled. They quickly understood that the reason for the reversal was Treasury yields spiraling out of control. As a member of The Arora Report, you know that ahead of the curve. We previously wrote:
In The Arora Report analysis, the foregoing played a role, but the real reason for the tariff reversal was likely the rise in bond yields.
- In The Arora Report analysis, the tariff reversal has now exposed President Trump’s pain threshold to foreign leaders. Foreign leaders will take advantage of this knowledge by taking a tougher stand in negotiations with the U.S. on trade.
- In general, a weaker dollar helps the stock market because it helps earnings of multinationals. A majority of the companies in the S&P 500 are multinationals. Having said that, in The Arora Report analysis, concern is mounting about the dollar drop. The hallmark of a strong country is a strong currency. In The Arora Report analysis, those who are cheering the fall in the dollar, such as crypto promoters, are not thinking of the long term future of the U.S.
- Overnight, stock futures were coming under pressure after yesterday’s reversal in SPY shown on the chart. Helping the stock market this morning are earnings from JPMorgan. Earnings from JPMorgan are better than the consensus and whisper numbers. JPM is long from $34.14 in the ZYX Buy Model Portfolio. JPM is trading at $231.39 as of this writing in the premarket. This represents a gain of 578% for long time members.
- On the flip side, JPMorgan’s CEO Jamie Dimon is observing that geopolitics is causing turbulence.
- China has increased tariffs on U.S. goods to 125% in response to President Trump raising tariffs on Chinese goods.
- The just released Producer Price Index (PPI) shows inflation at the producer level falling. In The Arora Report analysis, this data is likely anomalous and driven by mechanics related to stockpiling of goods ahead of tariffs. Here are the details:
- Headline PPI came at -0.4% vs. 0.1% consensus.
- Core PPI came at -0.1% vs. 0.3% consensus.
- University of Michigan consumer sentiment will be released at 10am ET and may be market moving.
- 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. The protection band is one of the large number of unique edges that are available to members of The Arora Report.
- If foreigners continue to dump the dollar, as a heads up, the protection band will need to be raised. Consider buying new positions only with great moderation, unless there is a specific post. There is also too much risk in short selling – all President Trump has to do is send a tweet and the market can soar.
- Prudent investors also need to keep in mind that the best opportunities occur during uncertain times. Long time members may remember The Arora Report’s signal on March 9, 2009 to back up the truck and buy stocks. That signal was given at the most uncertain time when Wall Street was giving sell signals. Hindsight shows that March 9, 2009 was the exact date when the decade long bull market started.
- On April 8, 2025, when most analysts were claiming that a capitulation had occurred, The Arora Report shared with you that in our analysis a capitulation had not occurred. That call has now proven spot on. The stock market’s behavior since April 8 is crystal clear that those claiming capitulation had occurred were wrong. Those who want to understand capitulation may consider listening to the podcast titled “THE TEN SECRETS OF EPIC CAPITULATION RICHES.”
- The worst mistake investors can make is to not stay engaged during this turbulent time. For example, many investors had become disengaged and did not follow The Arora Report’s signal to back up the truck and buy signal on March 9, 2009. Subsequent emails from such investors show that they regretted disengaging and missing out on one of the most profitable signals ever.
Magnificent Seven Money Flows
In the early trade, money flows are positive in Nvidia (NVDA), Microsoft (MSFT), and Alphabet (GOOG).
In the early trade, money flows are negative in Apple (AAPL), Amazon (AMZN), Meta (META), 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 *** in the early trade.
Note for new members: Smart money often sells into the strength generated by momo crowd buying and buys into the weakness generated by momo crowd selling. Over a long period of time, investors come out ahead by adopting smart money’s ways. The exception is in a raging bull market – for very short term trades, consider following the momo crowd and not smart money. Smart money is an important indicator but is only one of hundreds of indicators that go into determining the protection band and signals. Please click here and here to understand how signals are generated.
Very Very Short-Term Indicator
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.
Thank you for letting us know that the very very short-term indicator is of immense help to you. Having said that, this indicator is indeterminable again today because the stock market will move based on rumors and news related to President Trump. It is impossible to predict such rumors or news.
Gold
The momo crowd is *** gold in the early trade. Smart money is *** gold in the early trade.
For longer-term, please see gold and silver ratings.
Oil
The momo crowd is *** in oil in the early trade. Smart money is *** in the early trade.
For longer-term, please see oil ratings.
Bitcoin
Bitcoin (BTC.USD) promoters are celebrating the fall in the dollar and urging their followers to buy bitcoin, giving the dollar’s fall as the reason.
Markets
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.
S&P 500 futures are trading at 5283 as of this writing. S&P 500 futures resistance levels are 5400, 5500, and 5622: support levels are 5256, 5210, and 5020
DJIA futures are down 126 points.
Gold futures are at $3253, silver futures are at $31.60, and oil futures are at $59.82.
Protection Band And What To Do Now
It is important for investors to look ahead and not in the rearview mirror. The proprietary protection band from The Arora Report is very popular. The protection band puts all of the data, all of the indicators, all of the news, all of the crosscurrents, all of the models, and all of the analysis in an analytical framework that is easily actionable by investors.
Consider continuing to hold good, very long term, existing positions. Based on individual risk preference, consider holding *** in cash, Treasury bills, short term fixed income, 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.
A protection band of 0% would be very bullish and would indicate full investment with 0% in cash. A protection band of 100% would be very bearish and would indicate a need for aggressive protection with cash and hedges or aggressive short selling.
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 five 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.
