By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know now.
China Backlash Starts
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:
- In the Morning Capsule, we shared with you that the momo crowd was selling on Taiwan concerns.
- The chart shows that the momo crowd switched to buying when it became apparent that Pelosi would land safely.
- The chart shows more momo buying after Pelosi landed safely in Taiwan.
- The chart shows selling when the news came that a Chinese company CATL would postpone site selection for a battery plant in the US.
- Smart money sold on CATL news because CATL is a supplier to both Tesla (TSLA) and Ford (F).
- There are serious implications for popular US companies with large Chinese operations such as Apple (AAPL), Nike (NKE), Starbucks (SBUX), and Tesla. So far, the market is not concerned. Often, it takes some time for Wall Street to understand the implications, and the impact takes place after Wall Street firms start distributing their research to their clients.
- The chart shows the dramatic difference in behavior between the momo crowd and smart money. The reason for such a dramatic difference is that the momo crowd is usually solely focused on hope strategy to make money and not concerned about risk, whereas smart money is firstly concerned about risk, and then analyzes rewards secondarily.
- 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 was green when the momo crowd was buying. The VUD indicator turned orange when smart money selling overcame momo crowd buying.
Fed Officials Push Back
Three Fed officials are pushing back on the narrative of the momo gurus that the Fed will stop fighting inflation and cut rates.
- Chicago Fed President Evans said that a 50 basis points rate hike in September is reasonable but 75 basis points could be okay.
- Cleveland Fed President Mester said that inflation is not going to come down quickly.
- San Francisco Fed President Daly said that the Fed is nowhere near being almost done in fighting inflation.
We previously shared with you that Minneapolis Fed President Kashkari said that the Fed was a long way from backing off.
The pushback from Fed officials to momo gurus’ narrative so far has fallen on deaf ears. The reason is that momo gurus’ job is to keep on persuading investors to buy stocks irrespective of the data.
Money Flows
The momo crowd money flows since the Morning Capsule are 🔒 (To see the locked content, please take a 30 day free trial).
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
There appear to be buy on close orders.
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 🔒 gold on Pelosi safely landing after buying gold this morning. Gold has fallen below $1,800 on momo crowd selling.
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.
