By Nigam Arora & Dr. Natasha Arora

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

Powell Colors

Please click here for a chart of  Dow Jones Industrial Average ETF (DIA).

Note the following:

  • The chart shows that the market fell near the close.
  • Powell is a smart man. So why has he continued to pursue policies of money printing and near-zero interest rates that were put in place when the economy was locked down and there was no vaccine?
  • We have previously shared with you that there has been speculation that Powell was pursuing these nonsensical policies and repeatedly making calls that were turning out to be wrong to appease Biden.
  • Yesterday afternoon, speculation started spreading that now that Biden has renominated Powell, Powel has no need to pursue nonsensical policies.
  • The speculation is that if Powell starts pursuing sensible policies, the aggressive tech stocks may start topping.
  • The foregoing caused a drop in the stock market near the close.
  • It is extremely important that investors understand the impact of the Fed policy, especially on aggressive tech stocks.
  • 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 shows the momo crowd is buying the dip in the early morning.
  • Please click here for a chart of QQQ that is exactly the same for the sake of transparency that was published yesterday in the Afternoon Capsule.  Initially, DJIA  had continued to levitate while tech stocks faltered.  For details, please see the Afternoon Capsule.

Thanksgiving Holiday

Due to the Thanksgiving holiday, liquidity is about to drop in the stock market as trading desks will be staffed mostly by junior staffers.

Our offices will be closed starting this afternoon and will reopen on November 29 morning.  There will be no capsules during the holiday.

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 U. S. will release oil from SPR in coordination with India, Japan, and South Korea.

Note how the money flows have switched compared to recent history.

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 🔒. Expect DJIA to open higher but Nasdaq to open lower.  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 slightly 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 $1788, silver futures are at $23.43, and oil futures are at $77.76.

S&P 500 futures resistance levels are 4713, 4773, and 4900: support levels are 4600, 4460, and 4400.

DJIA futures are up 44  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.

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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.