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

Momo Buys The Bad News

Please click here for a chart of  Nasdaq 100 ETF (QQQ).

Note the following:

• The new data from Israel shows that Pfizer (PFE) vaccine was only 39% effective against the delta variant. This number is significantly lower than what is discounted in the stock market.
• There are also unconfirmed reports from Israel that those who were vaccinated in January 2021 are seeing a dramatic drop in protection against severe disease.
• In Los Angeles County, 20% of new infections were in fully vaccinated people in June. The number is likely to significantly rise in July.
• 75% of the population in Singapore is fully vaccinated.  Over the last 28 days, 44% of new cases were in fully vaccinated people.
• The foregoing data is showing that the momo crowds’ thesis of the delta variant not making any difference to the economy is likely wrong.  To learn about the prevailing wisdom in the stock market about the virus, please read yesterday’s Afternoon Capsule.
• The chart shows a strong rally in the stock market.
• The chart shows that the market is approaching resistance.
• The momo crowd is excited about the bad news on the virus and buying aggressively as of this writing. The reason for excitement is that if the virus gets worse than expected, the Fed will print money longer and Biden may borrow more to come up with new free money programs.
• Pay close attention to RSI on the chart.  RSI is showing a divergence – the price has moved up near the old high but RSI is dramatically lagging.  This indicates a loss of internal momentum in the market.

Fastest In Two Decades

July flash PMI in Europe shows that business activity is growing at the fastest rate in two decades.

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 🔒 in gold. 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 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 $1803, silver futures are at $25.28, and oil futures are $71.80.

S&P 500 futures resistance levels are 4400  and 4460: support levels are 4318, 4200, and 4000.

DJIA futures are up 185 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.

ECB COMMITTED TO NEGATIVE INTEREST RATES

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

Negative Interest Rates

Please click here for a chart of Eurozone ETF (EZU).

Note the following:

• The European Central Bank (ECB) said for the first time that ECB would tolerate an overshoot of its inflation target.
• This is a strategy shift by ECB. Previously the ECB was committed to keeping inflation below its target.
• The target is 2% just like the Fed.  Of course, you have to have been under a rock to believe that the real inflation is running under 2%.
• To achieve its objectives, ECB will keep interest rates negative.  ECB said that the deposit rate would not rise above -0.5% until inflation exceeds 2%.
• The euro is falling against the dollar on this ECB announcement.
• The significance for the U. S. investors is that the ECB is following the Fed’s footsteps.  This will encourage the Fed to continue printing money at a reckless rate and keep interest rates low.
• The chart shows the buy zone for eurozone ETF EZU at this time.
• This ETF has an abundance of cyclical and value stocks.  If interest rates start rising, it will make sense for investors to take a position in European stocks.

Jobless Claims

Initial Jobless Claims came at 419K vs. 360K consensus.  This is likely the result of delta variant spreading.  However, the momo crowd is not concerned about the delta variant.  To the momo crowd, the worse the virus gets, the higher the stock market will go.

Bitcoin

Bitcoin has moved above $32,000 on positive comments by Musk and Dorsey.

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 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 $1833, silver futures are at $25.22, and oil futures are $70.42.

S&P 500 futures resistance levels are 4400 and 4460: support levels are 4318, 4200 and 4000.

DJIA futures are down 53 points.

EARNINGS TAKE CENTRAL STAGE

July 21, 2021

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

Earnings

Please click here for a chart of  Nasdaq 100 ETF (QQQ).

Note the following:

• The chart shows that the rally was on a relatively good volume.  This indicates enthusiasm for buying stocks.
• The chart shows that RSI started moving up without falling in the oversold zone.  This indicates the momo crowd is willing to pounce and buy the slightest dip aggressively.
• Earnings are now center stage.
• NFXL earnings were significantly below the whisper numbers. However, the momo crowd is buying the dip aggressively. In spite of this buying, Nasdaq is coming under slight pressure in early trading as there is concern that other earnings of high flying stocks may also come less than the whisper numbers.
• Three DJIA components, JNJ, KO, and VZ reported earnings better than the whisper numbers.  This is helping DJIA.

See also  BEST OF ALL SCENARIOS IN THE MIDDLE EAST, APPLE IPHONE SALES FALL 10%, TESLA TO LAYOFF 10%

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

API came at a build of 806K barrels vs. consensus of a draw of 4.33M barrels.  This data is bearish however 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 $1798, silver futures are at $25.06, and oil futures are $68.35.

S&P 500 futures resistance levels are 4400 and 4460: support levels are 4318, 4200, and 4000.

DJIA futures are up 146 points.

INVESTORS HANGING THEIR HATS ON THE 50-DAY MOVING AVERAGE

July 20, 2021

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

50-Day Moving Average

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:

• Technically oriented investors are hanging their hats on the 50-day moving average and buying stocks.
• The chart shows the 50-day moving average.
• The chart shows five incidents of bounces from the 50-day moving average since March of this year.
• There is nothing inherently magical about the 50-day moving average.  Why not a 40-day or a 60-day moving average?
• The only reason the 50-day moving average has worked is that technical investors believe in it and buy when it is touched.  Buying by such investors lifts the market and these investors become stronger believers in the 50-day moving average.
• The chart shows RSI is close to the oversold level and has turned flat. This is also encouraging technically oriented investors to buy.
• The chart shows the selloff was on heavy volume.  In traditional technical analysis, this is considered a negative. However, investors are dismissing the heavy volume for a good reason.  Take a look at the chart – the prior selloffs have been on heavy volume but the market kept on going up.
• Technicals are helpful but investors should not make the decisions based solely on technicals.
• Investors should make their decisions based on an adaptive comprehensive model that has a long proven track record in both bull and bear markets. An example of such an adaptive model with a long proven track record in both bull and bear markets is ZYX Asset Allocation Model.  The model has 10 categories of inputs.

Bitcoin

Bitcoin has fallen below $30,000.

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 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 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 $1824, silver futures are at $25.18, and oil futures are $66.08.

S&P 500 futures resistance levels are 4318, 4400 and 4460: support levels are 4200, 4000 and 3950.

See also  PAY ATTENTION TO NVIDIA CHART FOR NEAR TERM MARKET DIRECTION, TECH INSIDERS SELL, BALTIMORE IMPACT

DJIA futures are up 94 points.

A NEGATIVE GAMMA ALONG WITH VIRUS CONCERNS DRIVES THE STOCK MARKET

July 19, 2021

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

Negative Gamma

Please click here for a chart of  Nasdaq 100 ETF (QQQ).

Note the following:

• The chart shows the last Arora call to raise cash.
• Smart money was selling stock futures yesterday evening.
• The selling has accelerated this morning.
• On the surface, the cause for the selloff is more concerns about the delta variant of the virus.
• The reality is more than the headline about the virus.
  • The chart shows that RSI had a divergence. In plain English, this means that when stock prices were going up, RSI was going down.  This indicated a loss of internal momentum in the stock market.
  • As we have written before, when a market gets overbought and there is RSI divergence, it tends to pull back.  After the fact, the gurus find reasons to explain the drop.
  • Investors should pay attention to the week starting out with likely negative gamma positions in the stock market-related options.  In plain English, it simply means that the market makers for options have a big reason to sell.
• Bond yields are falling precipitously.  At this stage in the economy, this is a big negative.
• Note from the chart that RSI is reaching the oversold level.
• When RSI becomes oversold, the market tends to bounce.  After the bounce, talking heads come out in force to explain the reasons for the bounce.

Momo Crowd And Smart Money In Stocks

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

Gold

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

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

Oil

OPEC+ has announced a deal increasing oil production. Oil is falling on the news.

As full disclosure, ZYX Short has a short position in 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 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 $1801, silver futures are at $25.14, and oil futures are $68.78.

S&P 500 futures resistance levels are 4318, 4400, and 4460: support levels are 4200, 4000, and 3950.

DJIA futures are down 523 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.