POWELL SPEAKS THE TRUTH BUT THE TRUTH SPOOKS THE STOCK MARKET

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

Market Spooked By The Truth

Please click here for a chart of S&P 500 ETF (SPY) which represents the benchmark for the stock market index (SPX).

Note the following:

You may be familiar with Arora’s Second Law, “Nobody knows with certainty what is going to happen next.”
In the whole wide world, the Federal Reserve has the most intellectual horse power, extremely accomplished people, and most resources.
Less knowledgeable investors wrongly assume that the Fed is an exception to Arora’s Second Law.
Powell spooked such less knowledgeable investors by speaking the truth. Powell said that it was not possible to predict with much confidence. Powell elaborated on the truth, “And so at this time we haven’t made any decisions about the path of policy and I stress again that we’ll be humble and nimble, we’re going to have to navigate crosscurrents and actually two-sided risks now.”
The chart shows that the market dropped as investors got spooked.
To those of you who have internalized Arora’s Thirty Laws and benefited tremendously from these laws, Powell’s statement will sound very similar to some of Arora’s laws. In the past we have been very critical of Powell’s forecast that inflation was transitory. You may recall that The Arora Report was the first one out of the gate to predict inflation last year. Subsequently, The Arora Report repeated several times that Powell was wrong in his forecast. All Arora calls relating to the Fed have proven spot on for a long time including the 2008 financial crisis and bear market.
Less knowledgeable investors are spooked because if the Fed can not predict with confidence, nobody can. Less knowledgeable investors wrongly believe that the markets can be predicted with certainty.
The chart shows that initially the market went up on the Fed’s statement because the statement did not include a mention of QT. The Arora Report issued an Interim Capsule titled “INTERIM CAPSULE: MARKET RUNNING UP ON WRONG INTERPRETATION”. The call in the Interim Capsule has proven spot on – Powell spoke extensively about QT.
We will discuss key points of the Fed policy later so that this capsule can get to you quickly.
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 on the chart shows that there was solid demand for stocks going into the Fed statement.
The VUD indicator on the chart shows that there was a solid supply of stocks as investors got spooked.
The VUD indicator has turned green as of this writing as smart money is beginning to buy the weakness created by momo crowd selling.

Money Flows

The momo crowd money flows since the Morning Capsule are 🔒 (To see the locked content, please take a 30 day free trial).

Smart money flows since the Morning Capsule are 🔒.

Short squeeze money flows are 🔒.

A Special Note To New Subscribers

Note the smart money behavior. Smart money tends to sell into strength on strong up days.

New subscribers should consider adopting smart money’s way of investing and trading.

Sentiment

Sentiment is 🔒.

Sentiment is a contrary indicator at extremes. In plain English, this means that when sentiment becomes extremely positive it is time to sell and when sentiment becomes extremely negative it is time to buy.

Gold

The momo crowd money flows in gold are 🔒 since the Morning Capsule.

Smart money flows are 🔒 in gold since the Morning Capsule.

Oil

The momo crowd money flows in oil are 🔒 since the Morning Capsule.

Smart money flows in oil are 🔒 since the Morning Capsule.

Buy Zones And Buy Now Ratings

🔒

Nibbling

🔒

Close

There appear to be sell on close orders.

There is merit to watching the pattern of market on close orders as they represent the day’s dominant net cumulative activity by many professionals and funds.

This post was published yesterday in The Arora Report paid services. Since then the Morning Capsule has had an update in the paid services.

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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.