WEEKLY STOCK MARKET DIGEST: MOMO CROWD INCOHERENCE — SELLING GOLD AND BUYING SILVER, BUYING DOGECOIN AND BITCOIN

Weekly Digest from The Arora Report is popular among serious investors and money managers because they have found studying insights from the prior week gives them an edge over the coming weeks. Here is the day by day rundown from the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers of The Arora Report

Please scroll down for the section ‘Protection Bands and What To Do Now.’

MOMO BUYING ON SENATE ADOPTING BIDEN STIMULUS PLAN

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

Senate Adopts

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

Note the following:

  • Momo crowd is excited and buying stocks on the Senate adopting Biden’s stimulus plan.  Vice President Harris broke the tie. The plan is being rammed through without any Republican support.
  • Under the plan, a well-to-do family of four that has suffered no economic loss and may have even gained during the pandemic will receive $5600 in free money.  Wall Street is celebrating as billions of dollars of this money will come into the stock market and likely buy aggressive momo stocks.
  • There are other provisions in the plan that will go to the rich leading to more money coming into the stock market and real estate.
  • To pay for the plan $1.9 trillion will be borrowed — a reckless amount of borrowing in our analysis.
  • Right now the prevailing wisdom is that there are no adverse consequences of reckless borrowing and money printing.  In our analysis, the prevailing wisdom is just plain wrong.  However, it is the job of investors to make money under all market conditions.
  • The chart shows that the stock market is breaking out of micro resistance.
  • The chart shows that the breakout is on the news of the Senate adopting Biden’s stimulus plan.
  • The chart shows that the RSI pattern is negative.
  • The chart shows that the volume is not high during the rally. This is a negative.

Jobs Report

Non-farm Private Payrolls came at 6K vs. 60K consensus.

Non-farm Payrolls came at 49K vs. 50K consensus.

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

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 🔒.  Remember that today is Friday and Fridays often experience a short squeeze. 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 $1796, silver futures are at $26.67, and oil futures are $56.93.

S&P 500 futures resistance levels are 3920 and 4000: support levels are 3860, 3800 and 3630.

DJIA futures are up 171 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.

MOMO INCOHERENCE — SELLING GOLD AND BUYING SILVER, BUYING DOGECOIN

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

Incoherence

Please click here for a chart of gold ETF ().

Note the following:

  • The momo is buying bitcoin because only a fixed number of bitcoins can be created.  Momo contends that this feature will make bitcoin a store of value.
  • Momo is aggressively buying dogecoin because there is not a fixed number of coins and thus more coins can be created to meet the demand.
  • It is often forgotten that dogecoin was started as a joke.  So far its main use is for tipping services online.
  • Gold and silver often move together.
  • Momo is aggressively selling gold.
  • Momo is aggressively buying silver.
  • The chart shows that gold has broken support.
  • The next psychological support is at $1800.  That support will be tested.
  • Momo is buying stay at home stocks and economy opening stocks at the same time.
  • Momo is aggressively buying oil claiming that demand for oil will go up but at that same time they are aggressively selling those parts of the economy that use oil and buying green energy as well as electric vehicle stocks.
  • Momo is selling inexpensive stocks and buying the most expensive stocks.

Jobless Claims

Initial Jobless Claims came at 779K vs. 825K consensus.

Unit Labor Costs

Unit Labor Cost came at 6.8% vs. 3.3% consensus.  This is a big jump in labor costs.  Of course, the government maintains that there is no inflation.  Investors be alert. 

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 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 $1812, silver futures are at $26.62, and oil futures are $56.09.

S&P 500 futures resistance levels are 3860, 3920 and 4000: support levels are 3800, 3630 and 3600.

DJIA futures are down 48 points.

A MAJOR COUNTRY DECIDES TO BUCK THE TREND OF RECKLESS BORROWING AND MONEY PRINTING

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

Buck The Trend

Please click here for a chart of India ETF ().

Note the following:

  • The momo crowd contends that reckless money printing and borrowing will not have any adverse effects because all major countries in the world are doing it.
  • Until last week the momo crowd was right, in part, about all major countries doing it.
  • In a pleasant surprise, India has become the first major country to buck the trend.
  • Earlier this week, India unveiled its budget for the next 12 months.
  • It is hard to believe but it is true, the budget calls for reducing debt.
  • It is even more surprising considering that India is in a face-off with China over border issues and needs more defense spending to counter China’s massive defense spending.
  • The defense budget is only a tiny bit higher than the prior year.
  • India is dramatically increasing spending on healthcare to take care of its citizens.
  • Compared to the U. S. where the economy is doing well and still the government insists on reckless borrowing to give free money to those who do not need it, India’s decision to restrain spending at a time when its economy is not doing well is remarkable.
  • India’s economy was the fastest-growing major economy in the world but it is estimated to have shrunk by 8% in the fiscal year that will end on March 31.
  • The chart shows that investors like the restraint.  Stocks in  Mumbai jumped 5%.
  • The chart is of ETF , the ETF of choice for India.
  • The chart shows India is in an uptrend.
  • The chart shows resistance is close.
  • India offers, perhaps the best opportunity, for very long term investors.  However, investing in India is tricky because of high market volatility.
  • ZYX Emerging is a rare highly respected service that has continuously covered India and 14 other emerging markets for a very long time.

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 up and bonds are ticking down.

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 $1839, silver futures are at $27.10, and oil futures are $55.30.

S&P 500 futures resistance levels are 3860,3920  and 4000: support levels are 3800, 3630 and 3600.

DJIA futures are down 47points.

OLD WIVES’ TALES BURN MOM AND POP SILVER INVESTORS, BIDEN’S TRILLIONS

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

Old Wives’ Tales

Please click here for a chart of silver ETF ().

Note the following:

  • Yesterday, when silver was trading much higher, we wrote in ZYX Buy:

If CFTC increases the margin, a reasonable expectation is that silver will fall by about 10%.

  • Our call was to take partial profits in the Trade Around position.
  • The call has now proven spot on. Subsequent to our call  CME raised margin requirements and silver fell.
  • The chart shows support resistance lines.
  • Short sellers also got burned because they are still using the methodology of the 1990s of putting stops.  Their stops were just above the top resistance line shown on the chart.
  • All of those stops were taken out by smarter players who know where most investors put their stops.
  • Over the weekend, moms and pops rushed to buy silver motivated by old wives’ tales. We will not spread these false stories by repeating them here.
  • Take a look at the chart for the price of ETF .  It is trading at $25.32.  Over the weekend, many investors paid over $40 per ounce.  Of course, they will claim that they have not lost any value because they have not sold what they bought.  However, from a long-term investment point of view, it is difficult to come out ahead when such huge premiums are paid.
  • Silver has many uses that are promising such as those in electric cars and solar panels.
  • Silver is an excellent conductor of electricity but it is expensive.  For this reason, less and less silver is being used for each connector point — the typical use of silver.
  • Much of the analysis out there is flawed and backward-looking.
  • Silver bulls make hay out of gold/silver ratio which has steadily dropped.
  • When was the last time you used a camera with film?  Film was one of the biggest uses of silver.  That use is now gone but most of the analysis out there does not take this into account.

Biden’s Trillions

The momo crowd is excited that Biden appears to have rejected a proposal from Republican Senators to borrow less and provide more targeted stimulus.  Democrats seem determined to borrow trillions and give away free money including to those who do not need it.  A large part of this money will flow into the stock 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 🔒 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 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 $1833, silver futures are at $27.63, and oil futures are $55.08.

S&P 500 futures resistance levels are 3800, 3860 and 4000: support levels are 3630, 3600 and 3520.

DJIA futures are up 254 points.

MOM AND POP PAYING 30% PREMIUM TO BUY SILVER AS THE FEVER REACHES ITS PEAK SO FAR

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

The Fever

Please click here for a chart of silver ETF ().

Note the following:

  • The chart shows that silver gapped up and now is at the highest resistance point.
  • RSI on the chart shows that there is room for the price to run.
  • The prior resistance points below the price are now support levels.
  • Over the weekend, the fever to buy physical silver reached its peak so far. Mom and pop rushed to the local precious metal dealers, coin shops  and pawn shops. Mom and pop grabbed all the inventory with nothing left for the stores to sell.
  • Many websites catering to retail investors stopped accepting orders. Some sites stopped quoting.
  • The most interesting part of the fever is that mom and pop are paying 30 – 60% above the spot price of silver.  These investors did not care what price they paid, they just wanted to get whatever they could buy.
  • It will be interesting if the Reddit army starts selling meme stocks to buy silver.
  • Conspiracy theories about big banks such as  having large short positions in silver have taken hold.
  • Silver is a small market but it is a much bigger market than the meme stocks.
  • In our analysis, the Reddit army does not have enough horsepower to cause a short squeeze in silver.
  • For a short squeeze to occur in silver and the present price momentum to continue, the old momo crowd, as well as hedge funds, will have to join the frenzy.  The probability of both joining the frenzy is fairly high.  However, expect some banks to act to contain the rise and even attempt to push the price down.
  • Stock market futures opened lower yesterday but buying from Asia and the prospect of stimulus brought in a lot of buying.
  • Last week we shared with you the new month buying by the blind money.  Traders are front running the blind money by buying aggressively.
  • As we have previously written, keep in mind that in a post-election year, February tends to be a weak month.

Momo Crowd And Smart Money In Stocks

The momo crowd is aggressively buying stocks in the early trade. Smart money is inactive.

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 $1869, silver futures are at $29.85, and oil futures are $52.59.

S&P 500 futures resistance levels are 3800, 3860 and 3920: support levels are 3630, 3600 and 3520.

DJIA futures are up 219 points.

Markets can generate substantial wealth for knowledgeable investors. NOW YOU TOO CAN ALSO SPECTACULARLY SUCCEED AT MEETING YOUR GOALS WITH THE HELP OF THE ARORA REPORT. You are receiving less than 2% of the content from our paid services. …TO RECEIVE REMAINING 98% INCLUDING MANY ATTRACTIVE INVESTMENT OPPORTUNITIES,
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