By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
Continue To Take Profits
Consider continuing to take advantage of the strength and slowly book profits on tactical positions. Consider continuing to hold strategic positions.
The plan is to buy again to rebuild tactical positions on a dip.
In addition to taking profits, there are opportunities to buy. Please see recent posts. New members who are under invested may consider focusing on the Model Portfolios.
Lesson From Japan For Prudent Investors
Please click here for a 42 year chart of Nikkei 225 Index.
Note the following:
- Money is flowing into Japanese and Indian stocks. Money is beginning to flow out of U.S. stocks.
- The Japanese stock market offers a highly valuable lesson for prudent investors.
- In the 1980’s, Japanese investors had the same mindset that U.S. investors currently have.
- Japanese investors had become big buy and hold investors. They were very optimistic about the future of Japan’s stock market, convinced it would go higher.
- The chart shows on December 29, 1989, Nikkei 225 hit an all time high of 38,957.44.
- The chart shows 20 years later Nikkei 225 dropped 81.9% to 7,054.98 on March 10, 2009.
- The chart shows that now, 15 years later, Nikkei 225 is finally over 36,500. Even after 35 years, the Japanese stock market has not yet eclipsed its old high.
- The chart shows Nikkei 225 is approaching its all time high. In The Arora Report analysis, Nikkei 225 is likely to go higher because money is flowing into Japanese stocks.
- Prudent investors need to remember the Nikkei 225 lesson. It can not be ruled out that the same thing could happen in the U.S. stock market for the following reasons:
- National debt is at $34T and growing quickly.
- There is a $1.5T budget deficit.
- Both parties want to borrow and spend.
- The lesson for investors is to be neither a permabull nor a permabear, but instead to invest based on the hard data.
- The Arora Report’s choice ETF to invest in Japan is EWJ. See the ZYX Allocation Model Portfolio for the Buy Now rating, buy zone, and allocation.
- There is also a position in Japanese currency ETF FXY in ZYX Allocation Model Portfolio.
- The Indian stock market has just become the fourth largest stock market in the world. ZYX Emerging is a rare service that has followed India continuously for 17 years. There are three Indian ETFs in the ZYX Emerging Model Portfolio to give you full spectrum exposure to India. In ZYX Buy, there is FFXDF – an India focused fund that is run by the Warren Buffett of Canada and trades in the U.S.
- The Chinese government has just stepped up to support the Chinese stock market with $279B.
- In the U.S. market, several important earnings have just been released. They are mixed, disappointing the bulls.
- As an actionable item, the sum total of the foregoing is in the protection band, which strikes the optimum balance between various crosscurrents. Please scroll down to see the protection band.
Magnificent Seven Money Flows
In the early trade, money flows are positive in Apple (AAPL).
In the early trade, money flows are neutral in Amazon (AMZN), Nvidia (NVDA), Microsoft (MSFT), Alphabet (GOOG), Meta (META), and Tesla (TSLA).
In the early trade, money flows are mixed in S&P 500 ETF (SPY) and Nasdaq 100 ETF (QQQ).
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 *** in the early trade.
Gold
The momo crowd is *** in gold in the early trade. Smart money is *** in the early trade.
For longer-term, please see gold and silver ratings.
Oil
The momo crowd is *** in oil in the early trade. Smart money is *** in the early trade.
For longer-term, please see oil ratings.
Bitcoin
Bitcoin (BTC.USD) has fallen below $40,000 as whales continue to take advantage of retail investors.
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 $2026, silver futures are at $22.44, and oil futures are at $73.67.
S&P 500 futures are trading at 4887 as of this writing. S&P 500 futures resistance levels are 4918, 5020, and 5210: support levels are 4852, 4826, and 4770.
DJIA futures are down 80 points.
Protection Band And What To Do Now
It is important for investors to look ahead and not in the rearview mirror.
Consider continuing to hold good, very long term, existing positions. Based on individual risk preference, consider holding *** in cash or Treasury bills 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, the 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.
Traditional 60/40 Portfolio
Probability based risk reward adjusted for inflation does not favor long duration strategic bond allocation at this time.
Those who want to stick to traditional 60% allocation to stocks and 40% to bonds may consider focusing on only high quality bonds and bonds of seven year duration or less. Those willing to bring sophistication to their investing may consider using bond ETFs as tactical positions and not strategic positions at this time.
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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.
