By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
Fueling Positive Sentiment
Please click here for a chart of silver ETF (SLV).
Note the following:
- The chart shows aggressive buying in silver.
- Silver ETF SLV is in the ZYX Buy Model Portfolio. The position is nicely profitable.
- The chart shows silver is breaking out of short term resistance.
- Significant overhead resistance is ahead that was created when the meme crowd went crazy in 2020 and 2021 and bought all the physical silver they could.
- In part, what happens to silver will depend on if the meme crowd goes crazy again.
- For the last few years, the traditional relationship between how silver moves relative to gold has been broken.
- The move on the chart shows that the traditional relationship between silver and gold moves is returning.
- The big move in silver is being triggered by Powell itching to cut rates.
- Powell has become ultra dovish. Fed Chair Powell is itching to cut interest rates. Powell said that the recent hotter inflation data does not “materially change” the outlook and he anticipates cutting interest rates later in the year.
- ISM Non-Manufacturing PMI came at 51.4% vs. 52.6% consensus. The weaker than expected services data caused the stock market to go up on its release.
- Sentiment was already extremely positive. Powell itching to cut rates and weaker ISM Services data is adding to the extremely positive sentiment.
- Also adding to the extremely positive sentiment are two pieces of news:
- Apple (AAPL) is working on a home robot as the next big thing.
- Google (GOOG, GOOGL) may charge for search based on AI.
- Jobless claims came at 221K vs. 214K consensus. This indicates that the jobs picture is still very strong, but not as strong as seen over the prior few weeks.
- The jobs report, the mother of all numbers, will be released tomorrow at 8:30am ET. The jobs report will likely be market moving.
- As an actionable item, the sum total of the foregoing is in the protection band, which strikes the optimum balance between various crosscurrents. Please scroll down to see the protection band.
Magnificent Seven Money Flows
In the early trade, money flows are positive in AAPL, Amazon (AMZN), Meta (META), Microsoft (MSFT), Nvidia (NVDA), and Tesla (TSLA).
In the early trade, money flows are negative in GOOG.
In the early trade, money flows are positive 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.
Gold
The momo crowd is *** 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 *** 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
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 $2304, silver futures are at $27.05, and oil futures are at $85.08.
S&P 500 futures are trading at 5291 as of this writing. S&P 500 futures resistance levels are 5400, and 5500: support levels are 5256, 5210, and 5020.
DJIA futures are up 203 points.
Protection Band And What To Do Now
It is important for investors to look ahead and not in the rearview mirror.
Consider continuing to hold good, very long term, 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.
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 seven 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.
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.
