By Nigam Arora & Dr. Natasha Arora
Note the following:
- The chart shows that the market is rebounding this morning.
- The chart shows that both support and resistance are nearby.
- The stock market momo crowd is excited about the new proposal from House Democrats.
- House Democrats are looking at the corporate tax rate of 26.5% instead of 28% proposed by Biden. Trump had lowered the corporate tax rate to 21%.
- House Democrats are looking at raising capital gains tax to 25% instead of 39.6% proposed by Biden.
- The exciting thing about the proposal for the momo crowd in the stock market is twofold:
- The promise has been that the $3.5 trillion Biden plan will be fully financed with additional taxes.
- The plan by House Democrats increases taxes a lot less than the Biden plan. How will the shortfall in revenues be made up? You already know the answer – more heavy borrowing. You also know that the momo crowd in the stock market loves borrowing. The prevailing wisdom is that reckless borrowing has only benefits and no adverse consequences.
- There is still considerable uncertainty about the budget. However, it is becoming clearer that Democrats will likely violate the promise of fully financing the big budget with taxes.
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 momo crowd is 🔒 gold in the early trade. Smart money is 🔒.
For longer-term, please see gold and silver ratings.
The momo crowd is 🔒 oil in the early trade. Smart money is🔒.
For longer-term, please see oil ratings.
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 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 $1790, silver futures are at $23.61, and oil futures are at $70.58.
S&P 500 futures resistance levels are 4600 and 4900: support levels are 4460, 4400, and 4318.
DJIA futures are up 218 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 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, 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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This post was just published on ZYX Buy Change Alert.
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