MOMO INCURS HEAVY LOSSES ON THE WHIPSAW

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By Nigam Arora & Dr. Natasha Arora

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

Heavy Losses

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

Note the following:

  • The chart shows aggressive momo buying after the Fed announcement yesterday.
  • Take a look at charts of momo’s favorite stocks and you will find that the moves were many times more than the move in . Many momo stocks went up 8 – 25% yesterday afternoon.
  • Smart money had started selling momo stocks right near the close yesterday.
  • The chart shows that today smart money has continued to sell momo stocks.
  • Many popular momo stocks that gained 8 – 25% yesterday are now lower than where they were at the beginning of the move.
  • The momo crowd is incurring heavy losses. Will they cut their losses and sell? Or will they listen to their gurus and buy more? The momo crowd behavior will have a major impact on the stock market in the coming days.
  • The strongest positive seasonality period starts tomorrow.
  • 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 is solid orange indicating a heavy supply of stocks.

An Important Lesson

The chart illustrates an important lesson for newer traders.  Many traders have been conditioned to trade all the time.   better way is to trade only when the conditions are just right.  As an example, our systems gave some signals yesterday and more signals this morning but we did not publish any one of them.  The reason was we could foresee a potential whipsaw.  Remember that not trading is a decision by itself and often a very judicious decision.

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One problem newer traders face is that the whole system is geared to persuade them to trade a lot.  Many services compete based on the number of trades.  Brokers make more money from more trading.  Traders need to focus on how much money they get to keep.  The number of trades is irrelevant.

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 🔒.

 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.

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

🔒

Close

There appear to be buy 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.

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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

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

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.

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