SMART MONEY SLAMS LONG DURATION MOMO STOCKS FOR A BIG LOSS

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

6.7% Drop In 90 Minutes

Please click here for a chart of ARK Innovation ETF (ARKK).

Note the following:

• In the Morning Capsule, we wrote,

Bonds have experienced the worst drop to start a year since 2009.

• We have previously explained that rising interest rates are not good for long-duration momo stocks.
• ARKK is the most popular ETF holding long-duration momo stocks.  Such stocks include ROKU, TDOC, TWLO, EXAS, SHOP, NET, PINS, ETSYand CRSP.
• Right out of the gate, smart money aggressively sold long-duration momo stocks.
• The chart shows from the peak to trough, ARKK dropped 6.7% in a matter of 90 minutes at a time when DJIA was strongly positive.
• 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.

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• The chart shows the VUD indicator was solid orange indicating net supply until about 2:30 pm.  As the momo buying has continued but smart money selling has stopped, the VUD has turned green as of this writing.
• In our analysis, unless interest rates back off, momo buying will cause strong rallies in long-duration momo stocks but smart money is likely to sell the rallies.
• It is perfectly fine to own select long-duration momo stocks in a highly diversified portfolio.  However, it is important for investors to review their portfolios to make sure they are not overly concentrated in long-duration momo stocks.  This especially applies to newer subscribers as many such subscribers own mostly momo stocks when they join The Arora Report. Their motivation to join The Arora Report is that they have lost significant amounts of money before joining The Arora Report while their friends have done well with The Arora Report.
• If you have been carefully following our posts and the Model Portfolios, you are likely in good shape.
• We have been receiving emails from many subscribers asking for a podcast on long-duration momo stocks and the impact of rising rates.  We are starting work on such a podcast that will be available to Arora Ambassador Club members.

ISM

The ISM Manufacturing Index came at 58.7 vs. 60.0.  This indicates slowing growth while inflation is rising. The release of this number caused significant selling in the market.  Of note is that momo bought the dip.

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.

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

🔒

Nibbling

🔒

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.