FED MINUTES PROVE MOMO GURUS WRONG BUT MOMO BUYS

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

Fed Minutes

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:

The chart shows when the Fed minutes were released.
- There was a mini short squeeze going into the Fed minutes. The short squeeze caused the VUD indicator to go green. This is normal behavior often seen going into important events.
- The chart shows an initial reaction of strong buying to the minutes.
- The chart shows that the market had second thoughts, and the rally was aggressively sold.
- The chart shows that the momo crowd aggressively bought the dip and is running up the stock market.
The minutes show that the momo crowd gurus have been totally wrong about the Fed. As of this writing, we do not know what they are saying after being proven wrong. However, the reaction of their followers is to buy the dip.
Here are the key points from the Fed minutes.
- The members generally agree on reducing the balance sheet by $95B a month.
  - About $60B will be Treasury securities, and about $30B will be mortgage securities.
- Many committee members would have voted for a 50 basis point increase in March if it was not for the Ukraine war.
- In our preliminary analysis, unless something changes, the Fed is set to increase interest rates by 50 basis points at the next meeting.
In the Morning Capsule we wrote,

The pace of QT may be faster than the market consensus.

The market consensus is about $70B per month.

In our analysis reading the tea leaves from Brainard’s speech, the QT may be $90B per month.

Looking ahead and predicting as often as we predict is one of the hardest endeavors. In the business of predictions, being 51% correct is considered excellent. Our call of $90B from this morning is as good as it gets in predicting the future.
As an actionable item, as of this writing, there is no change in our call from this morning to raise cash. Please see the section “Protection Bands And What To Do Now” in the Morning Capsule for the ranges.
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.
The VUD indicator shows that there is a net supply of stocks.

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.

Close

There appear to be sell 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.

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

🔒

This post was published yesterday in The Arora Report paid services. Since then the Morning Capsule has had an update in the paid services.

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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.