Weekly Digest from The Arora Report is popular among serious investors and money managers because they have found studying insights from the prior week gives them an edge over the coming weeks. Here is the day by day rundown from the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers of The Arora Report.
Please scroll down for the section ‘Protection Bands and What To Do Now.’
BANK OF JAPAN PAYS ATTENTION TO THE DATA, QUAD WITCH, NASDAQ REVERSAL
To gain an edge, this is what you need to know today.
Bank Of Japan
Please click here for a chart of Japan ETF (EWJ)
Note the following:
- It is no secret that the Fed has decided to keep on inflating the stock market bubble in spite of the stock market hitting new highs.
- In contrast to the Fed, the Bank of Japan (BOJ) has decided to act.
- Here are the key points:
- The chart shows that the Japanese market finally broke out after over 20 years.
- Take a look at the time scale on the X-axes on the chart. The U. S. is not Japan. Nonetheless, it should be a wake-up call for U. S. investors who have been brainwashed into believing that somehow they are entitled to make money if they blindly put money in passive stock funds.
- BOJ will allow long-term interest rates to move in a band of 0.25% instead of the current band of 0.20%.
- BOJ will buy ETFs only when markets destabilize.
- BOJ is responding to the Japanese market hitting new highs.
- These are the first steps to wind down the stimulus.
Quadruple Witching
Today is quadruple witching. In quadruple witching, stock index futures, futures options, stock options and single stock futures expire.
Quadruple witching may increase volatility.
Momo Stocks
Momo stocks bounced in the early trade for the following reasons.
- Quad witching appears to be putting upside pressure.
- Bond yields are pulling back.
- In the very, very short term momo stocks have become technically oversold. Oversold markets tend to bounce.
As the momo stocks were bouncing, interest rates started rising again. As of this writing, this has caused the bounce to fail. Continue to expect volatility due to quad witching.
Momo Crowd And Smart Money In Stocks
The momo crowd is🔒 (To see the locked content, please take a 30 day free trial) momo 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 momo crowd is 🔒oil in the early trade. Smart money is 🔒.
As full disclosure, ZYX Short has taken partial profits on an oil trade that was sold short right at the top.
Before sending us questions regarding inverse oil ETF SCO, please read the last Ask-Arora post on SCO.
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 are ticking up and bonds are ticking down.
The dollar is stronger.
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 $1736, silver futures are at $26.33, and oil futures are $59.70.
S&P 500 futures resistance levels are 3950, 4000 and 4200: support levels are 3860, 3770 and 3630.
DJIA futures are up 5 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, on dips, 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, 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.
POWELL HAS A PROBLEM – SMART MONEY DOES NOT BELIEVE HIM
To gain an edge, this is what you need to know today.
Powel Has A Problem
Please click here for a chart of 7-10 year Treasury bond ETF (IEF).
Note the following:
- For background, please start by first reading yesterday’s Morning and Afternoon Capsules.
- Yesterday Powell, in his press conference, did a masterful job, better than anyone expected.
- The immediate reaction to Powell was positive. Momo bought as expected but smart money also bought.
- This morning, Powell has a problem. Smart money has had second thoughts and does not seem to believe Powell.
- Yesterday, we shared with you that 10-year Treasuries were breaking down.
- The chart shows more selloff in bonds. Bonds fall when yields go up. The yield on the 10-year note has risen to 1.742%.
- Smart money is also selling momo stocks. If this trend continues, some aggressive momo stocks can potentially lose 60 – 90% of their value from the peak. Be careful and adjust your portfolio to make sure such stocks or ETFs are a fairly small part of your overall portfolio. There is no black and white in the stock market. If smart money starts believing in Powell, something they are not doing this morning, the momo crowd buying of the aggressive momo stocks can run some of them up 100% or more from here. Those who are holding such stocks and ETFs must develop a deeper understanding of how markets work. Your best resource is the Bullet Proof seminar.
Jobless Claims
Initial Claims came at 770K vs. 710K consensus.
Momo Crowd And Smart Money In Stocks
The momo crowd is🔒 momo 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 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 are ticking up and bonds are ticking down.
The dollar is stronger.
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 $1718, silver futures are at $26.00, and oil futures are $63.55.
S&P 500 futures resistance levels are 3950, 4000 and 4200: support levels are 3860, 3770 and 3630.
DJIA futures are down 41 points.
POWELL TO INFLATE THE STOCK MARKET BUBBLE BUT SMART MONEY DOUBTFUL
To gain an edge, this is what you need to know today.
Smart Money Doubtful
Please click here for a chart of 10-year Treasury Bond ETF (IEF).
Note the following:
- Long before anybody else was even talking about it, we shared with you that interest rates were likely to rise and cause trouble for the stock market.
- We suggested that the easiest way for most investors was to watch the ETF IEF.
- The chart shows support and resistance levels for IEF.
- The chart shows that previously the bounce failed at the resistance.
- The chart shows that in the early trade today, there is a breakdown in IEF below the support.
- Bonds move inverse to interest rates. In plain English, bonds fall when interest rates rise.
- Corresponding to the fall in IEF, 10 year Treasury yield has risen to 1.667% as of this writing.
- There is heavy selling in momo stocks due to the yield rising.
- The Fed will announce its policy decision at 2:00 pm ET followed by Powell’s press conference at 2:30 pm.
- There is zero probability of the Fed raising interest rates.
- There is less than a 5% probability of the Fed announcing a reduction in money printing or in Wall Street’s language, reducing bond purchases.
- It is remarkable that smart money is selling bonds and momo stocks ahead of the Fed’s announcement. This is uncommon.
- Serious investors, please revisit the chart from yesterday’s Afternoon Capsule and the analysis in yesterday’s Afternoon Capsule.
Housing Starts
Housing Starts came at 1.42M vs. 1.55M consensus.
Building Permits came at 1.68M vs. 1.75M consensus.
Momo Crowd And Smart Money In Stocks
The momo crowd is 🔒 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
API reported a draw of 1M barrels vs. a consensus of a build of 2.96M barrels.
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 are ticking up and bonds are ticking down.
The dollar is stronger.
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 $1729, silver futures are at $25.98, and oil futures are $64.20.
S&P 500 futures resistance levels are 3950, 4000 and 4200: support levels are 3860, 3770 and 3630.
DJIA futures are up 37 points.
SHOCKING DROP IN RETAIL SALES, FED MEETING
To gain an edge, this is what you need to know today.
Head And Shoulders Pattern
Please click here for a chart of Nasdaq 100 ETF (QQQ).
Note the following:
- The chart shows that the market is consolidating above the neckline.
- Considering that the market has not moved higher as $1400 free money checks are raining, is a negative.
- The head and shoulders pattern has still not been invalidated in spite of the market move higher.
Fed Meeting
The Fed meets today and tomorrow. The Fed’s decision will be announced at 2:00 pm ET tomorrow.
Historically, the momo starts buying today in anticipation of a dovish Fed statement tomorrow.
Retail Sales
Retail Sales Ex-auto came at -2.7% vs. 0.2% consensus.
Headline Retail Sales came at -3.0% vs. -0.6% consensus.
These retail sales numbers are shockingly low but should be ignored for the following reasons:
- Prior Retail Sales Ex-auto were revised to 8.3% from 5.9%.
- Prior Headline Retail Sales were revised to 7.6% from 5.3%.
- There was a stimulus check in January.
- There was no stimulus check in February.
- A stimulus check is coming in March.
Industrial Production
Industrial Production came at -2.2% vs. +0.5% consensus.
Capacity Utilization came at 73.8% vs. 75% consensus.
Momo Crowd And Smart Money In Stocks
The momo crowd is 🔒 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 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 are ticking down and bonds are ticking up.
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 $1732, silver futures are at $26.08, and oil futures are $63.90.
S&P 500 futures resistance levels are 4000 and 4200: support levels are 3950, 3860 and 3770.
DJIA futures are down 22 points.
DEBT DRUNKARDS MAKE GREAT OPPORTUNITIES FOR INVESTORS IN EMERGING MARKETS
To gain an edge, this is what you need to know today.
Opportunities
Please click here for a chart of emerging markets ETF (EEM).
Note the following:
- In the U. S., our leaders are behaving like drunkards. Instead of alcohol, they are binging on borrowing and money printing.
- The prevailing wisdom in the U. S. is that heavy borrowing and money printing is a free lunch.
- What do you do as an investor if you do not buy into the wisdom of the free lunch?
- Take a look at emerging markets.
- Many Asian emerging markets have been prudently managed. Their leaders have refrained from the U. S. style drunkenness.
- The chart shows that the trendline of EEM is broken.
- The reason that emerging market stocks are pulling back is that emerging markets are very sensitive to the rise in the dollar.
- Smart money is selling bonds in the U. S. causing yields to rise.
- As yields rise in the U. S., the dollar goes higher.
- If there is a significant pullback in emerging markets, it will be an opportunity for prudent long-term investors. Pay attention to the buy zones for 15 emerging markets and specialty ETFs in ZYX Emerging.
Momo Crowd And Smart Money In Stocks
The momo crowd is momo 🔒 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 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 are ticking down and bonds are ticking up.
The dollar is stronger.
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 $1732, silver futures are at $26.33, and oil futures are $65.00.
S&P 500 futures resistance levels are 3950, 4000 and 4200: support levels are 3860, 3770 and 3630.
DJIA futures are up 76 points.
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