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

Buying Opportunity

Please click here for a chart of  S&P 500 ETF (SPY) which represents the benchmark for the stock market index (SPX).

Note the following:

• The chart shows two support zones.
• Ideally, a stock market dip in the lower support zone will likely be a buying opportunity.  Of course, it is important to pay attention to individual buy zones of stocks and ETFs.  It is also important to pay attention to the Morning and Afternoon Capsules.  The stock market is always changing.
• S&P 500 was up 14.4% for the first half of 2021.  This is somewhat similar to 2019 and 1998.
  • In 2019, S&P 500 was up 18.8% in the first half.  It went on to be up 30% for the year.
  • In 2019, the market peaked in July, made a low in August and a new high in late October.
  • In 1998, S&P 500 was up 18.1% in the first half. It went on to be up 27.5% for the year.
  • In 1998, the market peaked in July.  It made a bottom in October and a new high in November.
  • In 2000 the market crashed.  Many popular tech stocks lost 90% of their value.
• Seasonality does not always work but it is important to pay attention to it.
• Investors should differentiate between different time frames.
• In about six trading days, the positive seasonality period will be over.
• The third quarter is traditionally the weakest quarter.

Jobless Claims

Initial Jobless Claims came at 364K vs. 400K consensus.  This is very strong data.  Sooner or later the Fed will have to stop its intransigence about money printing and start tapering.   This is a leading indicator and carries heavy weight in our models.

Employment Report

The Department of Labor will release the Employment Report at 8:30 am ET tomorrow morning.  This report has the potential to move the markets.  The consensus is for non-farm payrolls to be 725K and non-farm private payrolls to be 625K.

If these numbers come out significantly lower than expectations, it will reduce pressure on the Fed to taper its money printing.  In turn, the stock market will likely go up because money printing is a large part of the air that is fueling the stock market bubble.

In theory, if the number is significantly stronger than expectations, the stock market should go down because it will increase pressure on the Fed to start tapering soon.  However, the Momo crowd is likely to ignore any data that is negative from the stock market and buy on any data that allows the Fed to continue money printing at the present rate.

The Office Closed

Our offices will be closed tomorrow (Friday) for the Independence Day holiday.  There will be no capsules.

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 🔒.

Gold  

The momo crowd is 🔒 gold in the early trade. Smart money is 🔒.

For longer-term, please see gold and silver ratings.

Oil

Oil prices are surging on speculation that OPEC+ may extend the present oil production agreement beyond April 2022.

The momo crowd is 🔒 oil in the early trade.  Smart money is 🔒.

For longer-term, please see oil ratings.

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  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.

Gold futures are at $1781, silver futures are at $26.41, and oil futures are $75.68.

S&P 500 futures resistance levels are 4318 and 4400: support levels are 4200, 4000, and 3950.

DJIA futures are up 62 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, on dips, consider holding 🔒 in cash or treasury bills or short-term bond funds 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, 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.

A BREAKOUT IN THE LIFEBLOOD OF THE NEW ECONOMY AUGURS WELL FOR THE STOCK MARKET

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

The Lifeblood 

Please click here for a chart of semiconductor ETF (SMH).

Note the following:

• Semiconductors are the lifeblood of the new economy.
• Oil is the lifeblood of the old economy.
• The chart shows that semiconductors have broken out.
• RSI on the chart shows that there is more room to run.
• Semiconductors have often been the predictor of where the stock market goes next.
• The breakout in some semiconductors augurs well for the stock market.
• The stock market is in a seasonally strong period.
• Investors should distinguish between different time frames.  In the very, very short term, the stock market is getting overbought.  When the stock market gets overbought, even in a seasonally strong period, it becomes vulnerable to a shallow pullback.
• The concern is rising about the Delta Plus variant.  So far the stock market is ignoring the it but this variant has the potential to become the catalyst for a pullback.

ADP 

ADP is the largest private payroll processor in the country.  It uses its data to give a glimpse of the employment picture before the official report from the government that will be released on Friday at 8:30 am ET.

ADP Employment Change came at 692K vs. 400K consensus.

Momo Crowd And Smart Money In Stocks

The momo crowd is 🔒 stocks in the early trade.  Smart money is 🔒.

Gold

The momo crowd is 🔒 gold in the early trade. Smart money is 🔒.

For longer-term, please see gold and silver ratings.

Oil

The market is waiting for OPEC+ decision due out tomorrow.

API reported a draw in inventories of 8.153M barrels vs. consensus of a draw of 4.686M barrels.

The momo crowd is 🔒 oil in the early trade. Smart money is 🔒.

For longer-term, please see oil ratings.

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.

See also  WEEKLY STOCK MARKET DIGEST: INVESTORS BEGINNING TO REMEMBER RISKS IN STOCK MARKET

Interest rates are ticking down and bonds are ticking up.

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 $1757, silver futures are at $25.98, and oil futures are $73.77.

S&P 500 futures resistance levels are 4318 and 4400: support levels are 4200, 4000, and 3950.

DJIA futures are down 58 points.

THE MAIN FORCE BEHIND THE STOCK MARKET RISE KEEPS ON RISING

June 29, 2021

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

Fed Balance Sheet

Please click here for a chart of the Fed balance sheet.

Note the following:

• This is in response to a number of excellent questions from subscribers who studied the chart in yesterday’s Morning Capsule.
• The chart shows that the Fed’s balance sheet continues to rise rapidly and has now reached $8 trillion.  In plain English, the chart is showing money printing.
• The Fed keeps on buying $120 billion of bonds every month.  This policy was put in place when the country was locked down, the virus was running rampant, there was no vaccine, and prior to Democrats’ election victory resulting in massive borrowing and spending.
• You would think that with conditions so dramatically changed, the Fed would alter its policy.  However, the Fed remains intransigent in that they are going to keep on buying bonds at this rate for the foreseeable future.
• The money the Fed is creating out of thin air is flowing into the stock market and this keeps the market rising.
• Obviously, the Fed cannot keep doing this forever.  Now the Fed has acknowledged that it is time to start talking about talking about tapering this massive bond-buying every month.
• The best way to understand this stock market is to think of a bubble where the Fed and Biden keep on pumping more air inflating the bubble.  Bubbles do ultimately pop.  Here is the question for investors, “How big the bubble will get before it pops?”
• Investors should pay attention to the ‘Protection Bands and What To Do Now?‘  section below.  This is a good way for investors to take advantage of the bubble but at the same time protect themselves.

Momo Crowd And Smart Money In Stocks

The momo crowd is 🔒 stocks in the early trade.  Smart money is 🔒.

Gold

The momo crowd is 🔒 gold in the early trade.  Smart money is 🔒.

For longer-term, please see gold and silver ratings.

Oil

OPEC+ technical committee is meeting today.  The recommendation is likely to be to increase production.  OPEC+ will decide on Thursday.

The prevailing wisdom is that the oil demand increase will outstrip the production increase.

The momo crowd is 🔒 oil in the early trade.  Smart money is 🔒.

For longer-term, please see oil ratings.

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 $1754, silver futures are at $26.76, and oil futures are $73.26.

S&P 500 futures resistance levels are 4318  and 4400: support levels are 4200, 4000, and 3950.

DJIA futures are up 91 points.

PAY ATTENTION TO THE REAL FORCE MOVING THE STOCK MARKET

June 28, 2021

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

The Real Force

See also  WEEKLY STOCK MARKET DIGEST: WORST WEEK FOR THE STOCK MARKET IN 2024 – WHAT TO DO NOW

Please click here for a chart of ETF (DIA) which represents the Dow Jones Industrial Average (DJIA).

Note the following:

• The chart is a monthly chart to give investors a long term perspective.
• The chart includes the period of the 2008 crash when most portfolios invested in blue-chip stocks lost 50% of their value and those in speculative stocks lost a lot more.
• The chart shows (in purple) the progression of the Fed’s balance sheet (FBS) in trillions of dollars.  The FBS stood at $0.87 trillion before the 2008 crash.  Now the FBS has risen to $8 trillion.  In plain English, this is a fancy way to describe money printing.
• Note from the chart the amount the stock market has risen since the March 9, 2009, major buy signal given by the Arora Report.  The signal was given right at the start of the bull market.  This buy signal came after The Arora Report subscribers were protected using signals given in late 2007 to go 100% in cash, hedges, inverse ETFs and short selling.
• The Fed continues to print money at the rate of $120 billion a month.
• It is the Fed money printing that has been the major force behind the stock market rise.
• It is likely that sooner or later the Fed is going to start tapering.  In plain English, this means the Fed will print less money.
• Long term investors should take some time to study the chart to fully understand the risk in this market.

Momo Crowd And Smart Money In Stocks

The momo crowd is 🔒 stocks in the early trade. Smart money is 🔒.

Gold

The momo crowd is 🔒 in gold in the early trade. Smart money is 🔒.

For longer-term, please see gold and silver ratings.

Oil

The momo crowd is 🔒 oil in the early trade.  Smart money is 🔒.

For longer-term, please see oil ratings.

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 down and bonds are ticking up.

The dollar is slightly 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 $1775, silver futures are at $26.20, and oil futures are $73.82.

S&P 500 futures resistance levels are 4318 and 4400: support levels are 4200, 4000, and 3950.

DJIA futures are up 12 points.

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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.