By Nigam Arora
To gain an edge, this is what you need to know today.
Watch Oil
Please click here for a chart of S&P 500 ETF (SPY) which represents the benchmark stock market index S&P 500 (SPX).
Note the following:
- These days, it is very common for the most important stock market action to occur outside regular trading hours. For this reason, our charts are specifically designed to show the latest market action outside regular hours. When the day flips, for historical purposes, only the regular session action is shown. The regular session action does not show the full picture.
- Of note is the chart today no longer shows the market’s deep excursion into zone 1 (support zone). The reason is the deep excursion occurred in the premarket. To see yesterday’s premarket action, please click here.
- The chart shows the volume was heavier the last two days, but the volume is not heavy enough to provide any sort of confirmation of the moves.
- The chart shows RSI continues to hover around the oversold line.
- Yesterday, the stock market was deep in zone 1 in the premarket shown on yesterday’s chart when, shortly after 7am ET, President Trump postponed the bombing of Iran’s power plants and said talks were making good progress.
- President Trump continues to maintain optimism. President Trump is saying, “…this time, Iran means business; they want to settle. They want peace.”
- Officially, Iran is denying talks.
- Countries like Egypt, Turkey, and Pakistan are attempting to mediate. Information from these countries show that both sides remain far apart.
- Investors should pay attention to the oil market more than the stock market. In the stock market, the momo crowd is extremely bullish but oil is seeing buying on concerns that there is still a high probability the war may escalate.
- As an actionable item, the sum total of the foregoing is in the Arora Protection Band, which strikes the optimum balance between various crosscurrents. Please scroll down to see the Arora Protection Band. The Arora Protection Band is one of the large number of unique edges that are available to members of The Arora Report.
Eurozone PMI
In a surprise, in spite of the Iran war, manufacturing is undergoing expansion in the Eurozone. Manufacturing should have been adversely affected by rising oil and gas prices. A number above 50 indicates expansion. A number below 50 indicates contraction.
- Eurozone’s flash March manufacturing PMI came at 51.4 vs. 49.4 consensus.
- U.K. flash March manufacturing PMI came at 51.4 vs. 50.0 consensus.
- Germany’s flash March manufacturing PMI came at 51.7 vs. 49.6 consensus.
- France’s flash March manufacturing PMI came at 50.2 vs. 49.4 consensus.
Of note is the services PMI across Europe are coming weaker than consensus.
India PMI
Weaker numbers reflect the impact of the Iran war. Here is the data:
- India’s flash March manufacturing PMI came at 53.8 vs. 56.8 consensus.
- India’s flash services PMI came at 57.2 vs. 58.3 consensus.
India is a big importer of oil and natural gas primarily from the Middle East. If the Iran war stops, India will be a beneficiary. There is a signal for a trade around position on India ETF EPI in ZYX Emerging.
Magnificent Seven Money Flows
Most portfolios are now heavily concentrated in the Mag 7 stocks. For this reason, to get ahead and get an edge, investors need to dig below the surface of the Mag 7 stocks. It is equally important to rise above the noise of daily news on the Mag 7 stocks. The best way to get an edge, dig below the surface, and rise above the noise of the daily news is to pay attention to early money flows in the Mag 7 stocks on a daily basis. When there is significant news in the Mag 7 stocks that rises above the threshold of noise and impacts your entire portfolio, it is covered in the main section above.
In the early trade, money flows are negative in Apple (AAPL), Amazon (AMZN), Alphabet (GOOG), Meta (META), Tesla (TSLA), Nvidia (NVDA), and Microsoft (MSFT).
In the early trade, money flows are neutral 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.
Note for new members: Smart money often sells into the strength generated by momo crowd buying and buys into the weakness generated by momo crowd selling. Over a long period of time, investors come out ahead by adopting smart money’s ways. The exception is in a raging bull market – for very short term trades, consider following the momo crowd and not smart money. Smart money is an important indicator but is only one of hundreds of indicators that go into determining the Arora Protection Band and signals. Please click here and here to understand how signals are generated.
Very Very Short-Term Indicator
The Arora Report’s proprietary very, very short-term early stock market indicator is *** and will depend upon news and rumors about the war. 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.
Gold
The momo crowd is *** gold in the early trade, and this is reflected in gold ETF (GLD), silver ETF (SLV), gold miner ETF (GDX), and silver miner ETF (SIL). Smart money is *** in the early trade.
For longer-term, please see gold and silver ratings.
Oil
The momo crowd is *** oil in the early trade. Smart money is *** in the early trade.
For longer-term, please see oil ratings.
Bitcoin
Bitcoin (BTC.USD) is range bound.
Markets
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.
S&P 500 futures are trading at 6618 as of this writing. S&P 500 futures resistance levels are 6780, 7000, and 7200 : support levels are 6600, 6481, and 6322.
DJIA futures are down 129 points.
Gold futures are at $4407, silver futures are at $69.42, and oil futures are at $91.48.
Arora Protection Band And What To Do Now
It is important for investors to look ahead and not in the rearview mirror. The proprietary Arora Protection Band from The Arora Report is very popular. The Arora Protection Band puts all of the data, all of the indicators, all of the news, all of the crosscurrents, all of the models, and all of the analysis in an analytical framework that is easily actionable by investors.
Consider continuing to hold good, very long term, existing positions. Based on individual risk preference, consider holding *** in cash, Treasury bills, short term fixed income, 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.
A protection band of 0% would be very bullish and would indicate full investment with 0% in cash. A protection band of 100% would be very bearish and would indicate a need for aggressive protection with cash and hedges or aggressive short selling.
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 five 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.
