By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know now.
Option Expiration
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:
- The chart shows that the stock market has dipped below the algo selling line.
- In addition to the breach of the algo selling level, algo selling is related to option expiration.
- $4 trillion worth of options are expiring tomorrow. This is the biggest option expiration in two years.
- Tomorrow is also quadruple witching. In quadruple witching, stock index futures, futures options, stock options, and single stock futures expire.
- So far, it appears that the volatility leading to the quadruple witching is contributing to the selloff.
- Noteworthy of today’s selloff is that the momo crowd is selling.
- It appears that today is one of those rare occasions where momo gurus’ narratives to run up the stock market are failing.
- Why are momo gurus’ narratives failing today? We wrote in the Morning Capsule:
Powell was very careful to make it difficult for momo gurus to twist his words.
- Please click here for an intraday chart of S&P 500 ETF SPY. The chart shows consistent selling.
- Bulls will likely make an attempt to rally the stock market before the close. The success or failure of the rally attempt will depend on the reaction of options market makers.
- 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 is mostly orange, indicating net supply of stocks.
- What happens next between now and close tomorrow will depend on how far market makers are in squaring their positions.
Money Flows
The momo crowd money flows since the Morning Capsule are 🔒.
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.
Close
Orders on close are indeterminable.
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.
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
🔒
This post was published yesterday in The Arora Report paid services. Since then the Morning Capsule has had an update in the paid services.
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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.
