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

Investors Celebrate

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

Note the following:

• The chart shows that investors started the celebration immediately after the text of Powell’s speech was released.
• Please click here for the day chart that was published in the Morning Capsule prior to Powell’s speech.  Note that the high band of the green zone shown on the chart is $377.  QQQ is at $376.38 as of this writing.  Please read today’s Morning Capsule for more details.
• A decisive move above $377 in QQQ will increase the probability for the stock market to take off to the races.
• Investors are celebrating because, in the face of hard data that has many economists now calling for the Fed to immediately start tapering and also the Fed having been proven wrong on all of its projections so far, Powell did not change his stripes.  He wants to continue money printing for a while. The fuel that is inflating the stock market is money printing and government borrowing.  Powell’s decision to print money for a while longer will pump more air into the stock market.
• Here are the key points from Powell’s speech:
  • First is the ‘substantial further progress’ test has been met for inflation.
  • There has been clear progress towards maximum employment.
  • In spite of Powell acknowledging the foregoing in his speech that clearly calls for stopping the money printing, Powell said that they will continue to support accommodative financial conditions.
  • The timing and pace of tapering will not be intended to carry a direct signal for the timing of an interest hike.
  • There will be a more stringent test for an interest rate hike.
• 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 chart shows that the  VUD indicator is mostly green indicating strong demand for stocks.

Start Worrying

Powell’s speech is very positive for stocks in the short term.  However, his decision to continue to inflate the bubble is a negative development for the very long term. If you have not already been worried about reckless money printing and borrowing, it is time to start worrying and learning about protecting your wealth for the very long term. Based on your requests, we will be exploring the subject of protecting your wealth in detail in Arora Ambassador Club in the coming months.

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 buy on close orders.

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

Jackson Hole

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

Note the following:

• Much awaited Powell Jackson Hole speech will start at 10:00 am ET.
• The momo crowd is in control of the stock market.
• The momo crowd has already decided in advance that Powell will be very dovish and he will ignore all of the recent economic data.  For this reason, the momo crowd is buying ahead of the speech.
• The chart shows two zones – one in green and one in red. If QQQ goes above the green zone, this will mean that the momo crowd has prevailed at least temporarily.  The green zone is from $375.80 to $377.
• If the market falls below the red zone, this will indicate that the momo crowd was wrong. The red zone is from $366.50 to $370.

Economic Data Warns

Economic data released this morning is a warning against the current government policies.  However, our leaders are likely to ignore it.

PCE is the favorite inflation measure of the Fed.  July PCE Prices rose 0.4% vs. 0.4% consensus.  This shows inflation running at an annual rate of 4.8%.

July Personal Income rose by 1.1% vs. 0.2% consensus.  This is an inordinate rise in personal income.

July Personal Spending rose 0.3% vs. 0.4% consensus.

Does anybody even remember Trump being concerned about the trade deficit?   With Biden, all concerns about the massive transfer of wealth out of the United States to China have disappeared.

July Advanced International Trade In Goods show a deficit of $86.3 billion.

Germany

German import prices increased the most in four decades.

Momo Crowd And Smart Money In Stocks

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

Gold

The momo crowd in gold is different from the momo crowd in stocks.  The momo crowd in gold has different expectations from Powell’s speech.  They do not expect Powell to be as dovish as the stock momo crowd.

This illustrates why investors should look at the momo crowd not only in stocks but also in gold and oil.

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

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

Oil

A significant amount of oil is produced in the Gulf of Mexico.  Tropical Storm Ida is threatening the Gulf.  For this reason, the price of oil is rising.

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 $1801, silver futures are at $23.64, and oil futures are at $69.03.

S&P 500 futures resistance levels are 4600 and 4900: support levels are 4460, 4400, and 4318.

DJIA futures are up 85 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.

SOUTH KOREA BECOMES THE FIRST MAJOR ECONOMY TO RAISE RATES SINCE THE PANDEMIC

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

First Rate Hike

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

Note the following:

• The chart shows that so far the breakout in the stock market is holding.
• Human nature is such that when mass psychology gets going, anything can be twisted and justified.  The momo crowd and their gurus have turned the need for caution before Jackson Hole into an opportunity to buy before the risk event.  Based on what the momo crowd has done,  is Powell feeling pressure to not mention taper and be very dovish in order to not upset the momo crowd?
• While the momo crowd in the United States is oblivious, South Korea has become the first major economy to raise interest rates since the pandemic.  The base rate has been raised to 0.75%.  The Bank of Korea is raising the rates as the bank concluded that the economy was overheating.  The Bank of Korea is also worried that the rise in consumer debt is creating a new threat to the economy.
• Investors should note that The Bank of Korea is doing this while pushing its inflation expectations to 2.1% from 1.8% previously.  In contrast, in the United States inflation expectations are already much higher compared to 2.1% but the momo crowd believes easy money will continue.  So far the Fed has been compliant.

GDP

Second Estimate of GDP came at 6.6% vs. 6.6% consensus.

Jobless Claims

Initial Jobless Claims came at 353K vs. 355K 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 🔒.

See also  RAISE CASH, NEW DATA SHOWS HOTTER INFLATION – MOMO GURUS WRONG AGAIN, BULL MARKET INTACT

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 $1783, silver futures are at $23.62, and oil futures are at $67.46.

S&P 500 futures resistance levels are 4600 and 4900: support levels are 4460, 4400, and 4318.

DJIA futures are up 46 points.

MOMO EXCITED OVER BIDEN’S $5 TRILLION SPENDING WINNING A KEY HOUSE VOTE

August 25, 2021

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

More Borrowing

Please click here for a chart of the national debt.

Note the following:

• Make no mistake – the big rally in the stock market is fueled by government borrowing and money printing.
• The momo crowd is excited because the plans to borrow and spend more have just advanced.
• Biden’s $5 trillion spending plans have won a key House vote. The new spending and borrowing will inflate the stock market higher unless something else changes.
• Since the stock market is being inflated by excessive borrowing and money printing, there is more risk in the stock market than many investors believe at this time. However smart money knows that this will end badly and therefore smart money is protecting portfolios.
• Note from the chart how rapidly the national debt is increasing.
• The numbers shown on the chart represent $221,312 for every household.
• Conveniently for the politicians, the headline number is highly misleading. When you count unfunded liabilities such as social security and Medicare, the debt stands at over $889,802 for every household in the U. S.
• Momo buying is being met by some selling by those who want to reduce risk ahead of Jackson Hole.  This is putting brakes on the stock market advance in the early trade.

Durable Goods

Durable Goods came at -0.1% vs. -0.3% consensus.

Durable Goods Ex-transportation came at 0.7% vs. 0.3% 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 1.622M barrels vs. consensus of 2.367M 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 $1798, silver futures are at $23.84, and oil futures are at $68.17.

S&P 500 futures resistance levels are 4600  and 4900: support levels are 4460, 4400, and 4318.

DJIA futures are up 15 points.

NASDAQ 100 BREAKS OUT AHEAD OF JACKSON HOLE – BUYING IN CHINESE STOCKS

August 24, 2021

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

Breakout

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

Note the following:

• The chart shows that QQQ has broken out.
• RSI on the chart shows that there is more room to run.
• The most important observation is that the breakout has occurred ahead of the Jackson Hole speech by Powell.
• Until last week, there was apprehension that Powell may announce taper at Jackson Hole causing the market to fall.  Short sellers were building short positions ahead of Jackson Hole.
• Short sellers underestimated the power of the momo crowd being fearless.  Prudent investors are trying to lower their risks ahead of Jackson Hole. However, the momo crowd has a new justification – the spread of delta variant gives Powell an excuse to not announce taper at Jackson Hole.  Based on this justification, and totally dismissing the other side, aggressive momo buying is squeezing the short-sellers.  Never mind that there is some data showing that delta may be peaking.

Buying In Chinese Stocks

Aggressive buying in Chinese stocks is taking place.  Buying is super aggressive in Chinese internet stocks.  The buying started in Hong Kong and is continuing in the U. S. in the premarket.  The thinking is that new regulations will slow down Chinese tech stocks but they can still grow and they are much cheaper than U. S. stocks.

Momo Crowd And Smart Money In Stocks

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

See also  NVIDIA FALLS BELOW TRENDLINE, FED’S WALLER IN NO RUSH TO CUT RATES

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 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 $1810, silver futures are at $23.84, and oil futures are at $66.48.

S&P 500 futures resistance levels are 4600 and 4900: support levels are 4460, 4400, and 4318.

DJIA futures are up 56 points.

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

August 23, 2021

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 (QQQ).

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 🔒 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.

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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.