INVESTORS BUYING STOCKS ON YELLEN ENDORSING POWELL – GOLD ABOVE $1,800

By Nigam Arora & Dr. Natasha Arora

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

Excitement Over Yellen Endorsement

Please click here for a chart of  Nasdaq 100 ETF ().

Note the following:

  • Powell, more than any other person, has been instrumental in running up the stock market with his steadfast conviction of heavy money printing, zero interest rates, and the willingness to let inflation run hot in a departure from historic Fed policies.
  • Powell’s term at the Fed ends in February next year.
  • Investors would like nothing better than Biden renominating Powell.
  • Yellen is very close to Biden.  There are reports that Yellen has endorsed Powell.  Yellen’s endorsement carries heavy weight because of her long history at the Fed.
  • The chart shows buying in early trade.  The buying is due to excitement over Yellen’s endorsement of  Powell and heavy stock buying in Asia.
  • In Asia, they were buying the same stocks they were selling last week.
  • In the early trade in the U. S., investors are following in the footsteps of Asia and buying the same stocks they were selling last week. Examples are oil stocks, material stocks, and Chinese stocks.
  • Last week when the market was falling and opening significantly down, we wrote in the Morning Capsule:

    The chart shows that RSI is now oversold. It is easy to trigger a rally when the market is oversold.

    The chart shows the RSI call was correct as it was a bottom in the short term.

Bitcoin

Bitcoin has moved above $50,000.

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

Gold is seeing buying on Yellen’s endorsement of Powell.  If Powell gets renominated, he will likely continue to pursue policies that will be good for gold.

The momo crowd is 🔒 gold in the early trade  Smart money is 🔒.

For longer-term, please see gold and silver ratings.

Oil

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 🔒.  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 and bonds are range-bound.

The dollar is weaker on the prospect of Powell getting renominated.

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 $1806, silver futures are at $33.56, and oil futures are at $64.11.

S&P 500 futures resistance levels are 4460 and 4900: support levels are 4400, 4318, and 4200.

DJIA futures are up 166 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

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

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.

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