MOMO RESPONDS TO THE STOCK MARKET SELLOFF BY SHIFTING TO HIGH RISK STOCKS

By Nigam Arora & Dr. Natasha Arora

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

Momo Shifts To High-Risk Stocks

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

Note the following:

  • The chart shows that most of the damage to the stock market was done in the premarket.
  • The momo crowd has shifted to buying high-risk momo stocks.
  • There is logic to the momo crowd’s strategy.  If the only factor was interest rates, it makes sense to buy high-risk stocks because interest rates have fallen and bonds have risen.   With lower interest rates, the present value of future earnings is higher.
  • There are two flaws in the momo crowd’s logic:
    • Falling interest rates are only one factor. The stock market is complex and there are many other factors that the momo crowd is ignoring.
    • The future earnings estimates of most of the high-risk momo stocks are simply highly speculative and are likely too high.
  • 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 solid 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.

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.

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