By Nigam Arora & Dr. Natasha Arora
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.’
NEW BUY ZONES ON 41 STOCKS – MEMORIAL DAY SALE – DOUBLE BONUS
LEADING INDICATOR FALLS TO NEW PANDEMIC LOW
To gain an edge, this is what you need to know today.
Pandemic Low
Please click here for a chart of Nasdaq 100 ETF (QQQ).
Note the following:
- Unemployment insurance claims have fallen to a new pandemic low. Initial claims fell to 406K vs. 425K consensus. This is a leading indicator and carries heavy weight in our models. The data indicates that the employment picture is improving and the Fed is overdoing the money printing.
- The chart shows that pre-holiday buying has brought the tech stocks to no-man’s-land in between support and resistance.
- We had previously shared with you that RSI was overbought. Now RSI is pulling back. This has restrained the up move.
- The chart shows the volume is low. This is typical of pre-holiday.
GDP
GDP – Second Estimate came at 6.4% vs. 6.4% consensus.
Durable Orders
Durable Orders Ex-transportation came at 1.0% vs. 0.7% consensus.
Durable Orders headline number came at -1.3% vs. +0.8% consensus. This is a very volatile series and continues to indicate a strong economy.
Office Closed
For the Memorial Day holiday, our offices will be closed tomorrow. 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
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 $1897, silver futures are at $27.80, and oil futures are $65.70.
S&P 500 futures resistance levels are 4200, 4318, and 4400: support levels are 4000, 3950, and 3860.
DJIA futures are up 143 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 CELEBRATES FED AND BIDEN TURNING ‘KING DOLLAR’ INTO ‘POOR DOLLAR’
To gain an edge, this is what you need to know today.
Pay Attention To The Dollar
Please click here for a chart of U. S. dollar index (USDX) (DXY).
Note the following:
- For a long time, the dollar was known as ‘King Dollar.’ The reason was a strong U. S. economy.
- One of the reasons behind the prosperity of the United States has been the dollar is the reserve currency of the world.
- It is the dollar’s reserve currency status that has allowed the Fed and Biden to get away with reckless money printing and reckless borrowing.
- China and Russia have been doing everything they can to get rid of the dollar as the reserve currency.
- The prosperity of the U. S. and in return the U. S. stock market over the long term will depend, in large part, on if the dollar can maintain its reserve currency status.
- The chart shows the dollar has been falling.
- The chart shows that the dollar has now fallen to the support zone.
- Will the dollar bounce from the support zone or will it break below the support zone? This will be one of the key determinates of the market direction in the near future.
- A strong currency is the hallmark of a strong country. However, in the short term, the falling dollar is good for politicians, corporate executives, the stock market, and commodities.
- Right now the momo crowd is celebrating the weaker dollar as it makes the stock market go up and puts more air in the bubble.
- Investors in commodities including gold need to be especially careful. Commodities are priced in dollars. As the dollar goes down, commodity prices go up. However, if the dollar bounces from the support zone, it will negatively impact commodity prices.
- Investors need to pay attention to the time frames regarding various items in the Morning Capsule. The foregoing comments are from a long-term perspective. Some of the comments below regarding gold and oil are intraday moves. Markets are complex and multi-dimensional with lots of cross currents. It is a mistake to think of them in simpler terms.
Momo Crowd And Smart Money In Stocks
The momo crowd is 🔒 stocks in the early trade. Smart money is 🔒.
Gold
Gold has broken above the psychological resistance of $1,900. Until a few minutes before this writing, gold was seeing strong buying. However significant selling is coming into gold as the dollar is bouncing.
The momo crowd is 🔒 gold in the early trade. Smart money is 🔒.
For longer-term, please see gold and silver ratings.
Oil
API reports showed a draw of 439K barrels vs. a consensus of 1.05M barrels draw.
The momo crowd was 🔒 oil earlier on the API report. However significant smart money🔒 is coming into oil as the dollar is beginning to bounce from the support as of this writing.
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 $1904, silver futures are at $28.04, and oil futures are $65.49.
S&P 500 futures resistance levels are 4200, 4318, and 4400: support levels are 4000, 3950, and 3860.
DJIA futures are up 53 points.
DOLLAR SINKS – MOMO BUYING ON DOVISH COMMENTS FROM FED OFFICIALS
To gain an edge, this is what you need to know today.
Inflation
Please click here for a chart of Nasdaq 100 ETF (QQQ).
Note the following:
- Fed officials James Bullard and Raphael Bostic are issuing dovish statements saying that inflation will be transitory.
- The dollar is sinking on comments from Fed officials.
- The momo thrives on Fed money printing and dollar destruction. All momo needs now are indications of more government borrowing and the party will be in full swing again.
- Last week we wrote:
The pattern shown on the chart is that of a market with a fair probability of getting ready to form a setup for a bounce.
- The chart shows that the positive pattern has materialized into a rally.
- The chart shows the breakout line and the resistance line. These lines are the magnets for traders now.
- Not long ago, we were sharing with you that RSI was oversold and oversold markets tend to bounce.
- Now RSI has become overbought. It has more room to go before the market becomes vulnerable.
Musk’s Real Bitcoin Game
Many investors have been confused by Elon Musk’s comments on bitcoin. Musk’s negative comments were the reason for the fall in bitcoin. Now Musk’s positive comments are the reason for the bitcoin rally.
Musk’s real game has become clear – he is brilliantly promoting his energy business.
Momo Crowd And Smart Money In Stocks
The momo crowd is 🔒 stocks. 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 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 $1883, silver futures are at $27.73, and oil futures are $65.77.
S&P 500 futures resistance levels are 4318 and 4400: support levels are 4000, 3950, and 3860.
DJIA futures are up 71 points.
FED ENGINEERING INFLATION – CHINA MOVES TO COOL INFLATION
To gain an edge, this is what you need to know today.
Tug Of War
Please click here for a chart of iron ore China commodities (FE_F).
Note the following:
- In a strange way, a tug of war is erupting between the objectives of the U. S. and China regarding inflation.
- In the U. S., the Fed has gone all out to engineer inflation.
- The Fed believes that increasing inflation of 0.3 – 0.5% from the trendline will be good for the U. S.
- In our analysis, to accomplish this goal of a few basis point rise in inflation, the Fed is taking a huge gamble.
- Take a look at the chart of iron ore. Granted iron ore is a very small part of the economy but it illustrates the point.
- The chart shows a strong rise in iron ore price.
- The chart shows that China is cracking down on commodity price increases.
- China is the world’s largest consumer of commodities. The rise in commodity prices is one cause of inflation.
- The latest fall in iron ore prices is coming after China adopting a zero-tolerance policy on irregularities in commodity markets. China is warning against excessive speculation and hoarding.
Crypto
Cryptocurrencies are rising. Bitcoin has jumped more than 10% after falling about 7% over the weekend.
Ether is jumping about 17% after falling 8% over the weekend.
The fall in currencies over the weekend was related to the Chinese push against cryptocurrencies.
Ether is moving closer on a fix to reduce energy use by over 99%. If implemented, ESG investors may start favoring ether over bitcoin.
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 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 $1885, silver futures are at $27.87, and oil futures are $64.42.
S&P 500 futures resistance levels are 4200, 4318, and 4400: support levels are 4000, 3950, and 3860.
DJIA futures are up 146 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.
