INVESTOR OPTIMISM OVER AMERICAN BUYING BINGE FROM CHINA TEMPERED BY CONCERNS ABOUT MONEY PRINTING

By Nigam Arora & Dr. Natasha Arora

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

American Buying Binge From China

Please click here for a chart of  S&P 500 ETF () which represents the benchmark stock market index S&P 500 ().

Note the following:

  • The chart shows that the stock market has been moving up in a well-defined channel.
  • The chart shows the stock market is at the top of the channel.
  • Stock market bulls need ammunition to break above the channel.
  • The ammunition has come in the form of an American buying binge from China.  Does anyone even remember that not long ago President Trump was fighting a trade war with China to reduce the continuous transfer of wealth from the U. S. to China?
  • Significant optimism among investors has been created on the news that Chinese exports in August rose 25.6% year on year vs. consensus of 17.1%.  The rise in exports is primarily driven by an American buying binge from China.
  • The Chinese stocks are higher on the data.
  • Among investors, the optimism created by Chinese data is being tempered by concerns that the European Central Bank (ECB) will roll back its monetary stimulus.  In plain English, the better sense may prevail at ECB and they may reduce money printing.
  • The stock market does not like the idea of reduced money printing as it will reduce the air that is being pumped into the stock market by central banks.

Japan Surges

The Japanese market surged 1.83% to add to a prior gain of 2.05% on the news that Prime Minister Suga will not seek re-election.

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 🔒.

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 🔒.

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.

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 $1811, silver futures are at $24.44, and oil futures are at $68.11.

S&P 500 futures resistance levels are 4600 and 4900: support levels are 4460, 4400 and 4318.

DJIA futures are down 11 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, 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, 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.

To take a free 30-day trial to paid services to gain access to more opportunities, please click here.

This post was just published on ZYX Buy Change Alert.

 

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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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