By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
Sentiment
Please click here for a chart of Twitter (TWTR).
Note the following:
- The Morning Capsule is about the big picture and not about an individual stock.
- The chart of Twitter is being highlighted because Musk’s Twitter move has created a significant positive sentiment for tech stocks.
- The chart shows a gap up in Twitter’s stock when Musk announced that he had built over 9% stake in Twitter.
- The chart shows a second leg up on the news that Elon Musk is joining Twitter’s board.
- Of significant interest is that yesterday’s SEC filing showed that Musk’s stake in Twitter was passive. Passive means it is held for investment without any active involvement in or regarding the company by the investor. A day later, Musk becomes the most influential director of Twitter. This shows that investors should never take news at face value and should maintain access to independent resources without an agenda to be able to interpret important news that matters in a timely manner.
- Yesterday, we wrote in ZYX Buy:
Elon Musk has taken a stake in TWTR. At this time, his stake is marked passive. In our analysis, there is high probability that the stake will become active at some point.
- Under the agreement between Twitter and Musk, Musk will not become an owner of more than 14.9% of the common stock. In our analysis, if Musk does not get his way, it is only a matter of time before Musk buys more Twitter stock. Going forward in many ways, investors should think about the news regarding Twitter the same way they thought about the news about Tesla (TSLA) over the last few years. Every time there was positive news about Tesla, it created more positive sentiment about tech stocks and tech stocks were bought wholesale.
- Of special interest is that the Trump SPAC (DWAC) fell yesterday on the news of Musk buying a stake in Twitter. DWAC stock is falling further on the news that Musk has become a Twitter director. Trump has launched a new social media platform Truth Social. As a reference, Trump has been banned from Twitter. There is speculation that Musk will push for Twitter to allow Trump back.
- As a full disclosure, ZYX Buy has a core position in Twitter from $15.37. Twitter is trading at $54.70 as of this writing. Further as an important disclosure, ZYX Buy also has a new trade around position in Twitter, and the position is nicely profitable.
- We shared with you in yesterday’s Afternoon Capsule that the Twitter news had generated strong buying in NASDAQ stocks.
- New quarter blind money buying is now done. Without the Twitter news, the set up was for a substantial drop in the stock market today. However, the positive sentiment created by the Twitter news is cushioning the pull back in the early trade.
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 🔒 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 🔒 oil in the early trade. Smart money is 🔒 in the early trade.
For longer-term, please see oil ratings.
Bitcoin
There is positive sentiment in bitcoin on the news that MSTR bought bitcoins throughout the quarter.
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 weaker.
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 $1938, silver futures are at $24.89, and oil futures are $104.91.
S&P 500 futures resistance levels are 4600, 4713 and 4770: support levels are 4460, 4400 and 4318.
DJIA futures are down 79 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 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 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.
