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.

‘MOTHER OF ALL NUMBERS’ FAILS TO SETTLE THE DEBATE

June 4, 2021

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

‘Mother Of All Numbers’

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

Note the following:

The jobs report is known as the ‘mother of all numbers.’ The expectation was that the report would settle the debate over some people not wanting jobs because of generous unemployment benefits at a time when employers cannot find employees to grow their businesses.
There were also expectations that the jobs report would move the market in one direction or another.
Here are the jobs report details.
- Non-farm private payrolls came at 492K vs. 650K consensus.
- Headline non-farm payrolls came at 559K vs. 720K consensus.
- The average workweek came at 34.9 vs. 34.9 consensus. This indicates that employers are not increasing the hours of the workers to deal with the labor shortage.
- Average hourly earnings increased by 0.5% vs. 0.2% consensus. Wage increases at the rate of 6% per year are not going to be rolled back – inflation anyone?
- The unemployment rate fell to 5.8% vs. 5.9% consensus.
The chart shows that the muddling data is leading to a range-bound market especially in tech stocks.
The chart shows that the market is now in ‘no man’s land.’

Musk Broken Heart

Musk tweeted “#Bitcoin” with broken heart emoji. Bitcoin is falling.

Momo Crowd And Smart Money In Stocks

The momo is 🔒 (To see the locked content, please take a 30 day free trial) stocks in the early trade after the jobs report. Smart money is 🔒.

Gold

The momo crowd is 🔒 gold in the early trade after the jobs report. 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 is Friday and Fridays lead to short squeezes. 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 and bonds are range-bound.

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 $1886, silver futures are at $27.80, and oil futures are $69.28.

S&P 500 futures resistance levels are 4318 and 4400: support levels are 4000, 3950 and 3860.

DJIA futures are up 94 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.

BLIND MONEY SUPPORT GONE – MARKET UNDER PRESSURE

June 3, 2021

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

Blind Money Support

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

Note the following:

We previously shared with you that blind money was pouring into Wall Street on the first two days of the month and that was propping up the market.
We wrote,

The test of the market will be later this week after blind money buying is over.

Now that blind money buying is over, the market is coming under significant pressure in the early trade.
The jobs report will be released at 8:30 am ET on Friday.
Historically, the momo crowd aggressively buys on Thursday before the jobs report. Today, the momo crowd is not aggressively buying so far because the momo crowds’ attention has shifted. We previously wrote,

The new development today is that FOMO (fear of missing out) is setting into the momo crowd. The momo crowd cannot stand the meme crowd getting rich while their favorite stocks are causing them to lose money. Momo is beginning to sell their favorite stocks such as TSLA, and ZM to buy meme stocks.

The chart shows that the market has turned down long before it reached resistance. This is a negative.
The chart shows that RSI has turned down. This is a negative.
Tomorrow’s jobs report can totally negate everything. The jobs report is known as the ‘mother of all numbers’ for a good reason.

ADP

ADP is the largest payroll processor in the country. It uses its data to give a glimpse of the official jobs report ahead of time.

ADP Employment Change came at 978K vs. 675K consensus. This is a very strong number.

Initial Claims

Initial Jobless Claims came at 385K vs. 395K consensus. This is also a very strong number.

Momo Crowd And Smart Money In Stocks

The momo crowd is 🔒 in the early trade. Smart money is🔒.

Gold

The momo crowd is 🔒selling gold in the early trade. Smart money is inactive.

For longer-term, please see gold and silver ratings.

Oil

API reported a draw of 5.36M barrels vs. a consensus of a draw of 2.1M barrels. This is very bullish data.

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.

Gold futures are at $1885, silver futures are at $27.68, and oil futures are $68.94.

S&P 500 futures resistance levels are 4200, 4318, and 4400: support levels are 4000, 3950, and 3860.

DJIA futures are down 178 points.

INCONGRUENCE TAKES HOLD AMONG INVESTORS

June 2, 2021

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

Incongruence Takes Hold

Please click here for a chart of oil futures (CL_F).

Note the following:

Not long ago the prevailing wisdom was that everything is going green and the world did not need as much oil. Investors were selling oil as well as oil stocks.
Take a look at the chart – it tells a different story. Oil has rallied strongly and is performing better than stocks.
The chart shows that oil has broken out.
Here are the reasons behind the oil breakout.
- OPEC decided to increase output but the increase is less than anticipated.
- There was a concern that Biden would reach a deal with Iran but that concern seems to have disappeared.
- OPEC is painting a very positive picture of oil demand.
It is undisputed that oil price rise gets reflected in gasoline price hikes.
It is undisputed that gasoline price hikes are inflationary.
All of a sudden investors have done an about-face and now believe that oil will continue to go higher. At the same time, investors believe that inflation is temporary.
A certain degree of incongruence is setting in the 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🔒 inactive.

For longer-term, please see oil ratings.

Markets

Interest rates are ticking down and bonds are ticking up.

The dollar is stronger.

Gold futures are at $1906, silver futures are at $28.04, and oil futures are $68.39.

S&P 500 futures resistance levels are 4318 and 4400: support levels are 4000, 3950, and 3860.

DJIA futures are up 68 points.

CELEBRATION OF THE UNPRECEDENTED $6 TRILLION MAN IN AMERICAN HISTORY

June 1, 2021

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

Unprecedented In American History

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

Note the following:

Wall Street is frontrunning the blind money. Blind money is the money that flows into Wall Street on the first two trading days of the month without any analysis. Most of the buying for the blind money takes place in the afternoon. Wall Street is frontrunning by buying now and will sell at a profit to the blind money in the afternoon.
The chart shows that QQQ is moving up but resistance is ahead.
The chart shows that RSI is overbought.
The test of the market will be later this week after blind money buying is over.
Momo crowd is celebrating an unprecedented event in American history that has just occurred. President Biden has just become the first $6 trillion man by proposing a blowout $6 trillion budget.
The budget is $2 trillion more than before the pandemic. This blowout budget is on top of the $1.7 trillion infrastructure package that Biden is trying to get through Congress. Of course, everyone remembers trillions of dollars spent on sending free money, most of it to Americans who did not need it.
In the post-World War II era, budgets have averaged about 19.4% of GDP.
Biden proposes to bring the budget to about 25% of GDP in one big swoop.
The budget may rise to about $8 trillion in the coming years.
For the stock market, in the short term, it is a positive because Biden will continue to accelerate the reckless amount of money being borrowed and a large part will flow into the stock market.
Not many want to talk about how the borrowed money will be paid back. Not many want to talk about the Federal government eating up one-fourth of the GDP. Don’t forget the massive state and city budgets.

Inflation In Europe Heats Up

Inflation in the eurozone climbed to 2% in May.

Inflation in Germany climbed to 2.4%.

Nobody is concerned because the central banks have hammered the message that any rise in inflation will be temporary.

Central banks have a history of being wrong.

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

OPEC increased oil production by less than expected in May.

The momo crowd is 🔒 oil on the news in the early trade. The future OPEC increase in production will be decided in the OPEC meeting today. Smart money is 🔒.

For longer-term, please see oil ratings.

Markets

Interest rates are ticking up and bonds are ticking down.

The dollar is stronger.

Gold futures are at $1911, silver futures are at $26.46, and oil futures are $68.46.

S&P 500 futures resistance levels are 4318 and 4400: support levels are 4200, 4000 and 3950.

DJIA futures are up 269 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.