WEEKLY STOCK MARKET DIGEST: PAY ATTENTION – THE MOST POWERFUL SENATOR ALARMED BY MONEY PRINTING

By Nigam Arora & Dr. Natasha Arora

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.’

STRONG JOBS DATA PUTS THE FED AND MOMO CROWD IN A BOX

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

Fed In A Box

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

Note the following:

  • July Non-farm Private Payrolls came at 703K vs. 650K consensus.
  • July Non-farm Payrolls came at 943K vs. 845K consensus.
  • July average hourly earnings came at 0.4% vs. 0.3% consensus.
  • July unemployment rate came at 5.4% vs. 5.6% consensus.
  • The chart shows when the jobs data was released.
  • The chart shows an immediate drop in .
  • 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 is orange but the magnitude is very low.  This indicates that there is not a huge net supply of stocks.
  • The Fed has been maintaining its policy of printing $120 billion per month in spite of strong economic data.
  • This strong jobs report will put the Fed in a box and may force its hand to start tapering.
  • The momo crowd is oblivious but the real reason that some momo strategies have worked is the money printing by the Fed.  If the Fed starts tapering, it will become progressively more difficult for the momo crowd.

The Most Powerful Senator

Some believe that Joe Manchin is the most powerful Senator.  The reason is that Democrats need Manchin’s vote to do anything.

In an era when politicians are all about reckless heavy borrowing without any thought of how it will negatively impact the United States in the long run – when the most powerful Democrat Senator starts becoming concerned about the Fed policy, you should take notice.

“With the recession over and our strong economic recovery well underway, I am increasingly alarmed that the Fed continues to inject record amounts of stimulus into our economy,” Manchin wrote to Fed Chair Powell. Investors should take notice.

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 strong jobs report is causing a selloff in gold.

The momo crowd 🔒 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 $1773, silver futures are at $24.51, and oil futures are $69.63.

S&P 500 futures resistance levels are 4460 and 4600: support levels are 4400, 4318, and 4200.

DJIA futures are up 117 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.

MOMO BUYING AHEAD OF MOTHER OF ALL NUMBERS

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

Antidote To FOMO

Please click here for a chart of Fastly ().

Note the following:

  • The Morning Capsule is about the big picture and not about individual stocks or ETFs. The chart of FLSY is being used to illustrate the point.
  • We get a large number of emails from private investors and money managers alike asking how to avoid FOMO (fear of missing out).
  •  has been a perpetual favorite of the momo crowd.
  • Over a period of time, FSLY has been among the top momo stocks that investors have questioned as to why it was not in the Model Portfolio.
  • Momo usually buys FSLY ahead of earnings hoping for good earnings.  Earnings often disappoint and the stock sells off. Then momo runs it up again because it has become a good bargain.  In the process, the stock is down from $136.50 to $34.85 in the premarket as of this writing.
  • Take a close look at the FSLY chart.  This should serve as an antidote to FOMO.

Mother Of All Numbers

The jobs report will be released tomorrow at 8:30 am ET. It is known as the mother of all numbers because of its market-moving potential. There is significant uncertainty about the numbers to be released tomorrow.  To prudent investors, it is a risk event and they reduce the risk ahead of the event.  To the momo crowd, it is an opportunity to buy before the risk event because to them all risk events resolve to the upside. This has been a consistent momo pattern since March 23, 2020.

Jobless Claims

Initial Claims came at 385K vs. 375K 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 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 $1812, silver futures are at $25.47, and oil futures are $67.92.

S&P 500 futures resistance levels are 4460  and 4600: support levels are 4318, 4200 and4000.

DJIA futures are up 49 points.

MONEY FLOWING INTO INDIA, ADP DATA RAISES THE PROSPECT OF STAGFLATION

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

India

Please click here for a chart of  India ETF ().

Note the following:

  • We have previously shared with you in the Morning Capsule that India would be the prime beneficiary of China’s crackdown on tech stocks.
  • Now we are seeing evidence that some of the foreign money intended for China is flowing into India.
  • The chart shows that Indian stocks are breaking out to an all-time high.
  • RSI on the chart shows that there is room for Indian stocks to run.
  • For long-term investors, India represents one of the best opportunities. However, investors need to be careful as Indian stocks are benefiting from easy money.
  • Indian stocks have been continuously covered in ZYX Emerging for a very long time.

Stagflation

ADP data released this morning is raising the prospect of stagflation.  If stagflation happens, that would be one of the worst scenarios for the U. S. stock market.  Please pay attention to ‘Protection Bands and What To Do Now?’  section below.

ADP employment change came at 330K vs. 650K consensus.

Momo Crowd And Smart Money In Stocks

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

Gold

ADP data is causing significant buying in 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 especially after the ADP data.

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 $1835, silver futures are at $26.07, and oil futures are $68.86.

S&P 500 futures resistance levels are 4460 and 4600: support levels are 4318, 4200, and 4000.

DJIA futures are down 130 points.

MOMO BUYING STOCKS ON A BREAKOUT IN THIS LEADING SECTOR BUT YOU SHOULD IGNORE IT, ‘SPIRITUAL OPIUM’

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

Breakout

Please click here for a chart of semiconductor ETF ().

Note the following:

  • We have often shared with you that semiconductors are a leading sector and all investors should pay attention to them.
  • Our Model Portfolios are overweighted in semiconductors.
  • The chart shows that semiconductors have broken out.  Many gurus are getting excited about this breakout and issuing proclamations that the entire market will follow as has been the case several times in the past.
  • The momo crowd is getting more excited from the bullish proclamations and aggressively buying.
  • We always encourage investors to dig deeper.  When you dig deeper, you will find that the breakout in  is not because there is high tide for semiconductors but is only one component of the ETF – it is  with a strong up move.  For this reason, at least temporarily, investors should ignore this bullish signal.  Investors should watch other components of the ETF to see if they start breaking out.
  • Also, note from the chart that the breakout is on low volume.  This indicates a lack of conviction.
  • The chart also shows that the breakout is running into selling as evident by the red candle.

‘Spiritual Opium’

The Chinese government continues its mission to reform Chinese society.  In the latest move, video games were branded ‘spiritual opium.’  Important video game stocks such as , and  are plunging.  After watching the stocks plunge, there is a walk back with a much softer tone.

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 and bonds are range-bound.

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 $1815, silver futures are at $25.60, and oil futures are $69.49.

S&P 500 futures resistance levels are 4400, 4460, and 4600: support levels are 4318, 4200, and 4000.

DJIA futures are up 57 points.

ONE OF THE LONGEST PERIODS IN 100 YEARS WITHOUT A 5% CORRECTION

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

Without A Correction

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

Note the following:

  • It is the first day of the month. Blind money will pour into Wall Street as is the usual pattern.
  • Blind money is the money that investors put in the stock market on the first couple of days every month without any analysis and irrespective of market conditions.
  • Typically blind money is invested in the afternoon.  Professional traders are front running now.
  • The chart shows that this is one of the longest periods in 100 years that the S&P 500 has gone without a 5% correction.
  • In the face of all the bullishness, RSI is showing a divergence.  In plain English, this means that as shown on the chart the price is rising but RSI is making a lower high.  This indicates a loss of internal momentum.
  • The chart shows two important support zones.
  • It is a seasonally weak period to the end of October.  If there is a correction, the tentative plan is to buy.

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 $1811, silver futures are at $25.41, and oil futures are $73.05.

S&P 500 futures resistance levels are 4460  and 4600: support levels are 4400, 4318, and 4200.

DJIA futures are up 96 points.

Markets can generate substantial wealth for knowledgeable investors. NOW YOU TOO CAN ALSO SPECTACULARLY SUCCEED AT MEETING YOUR GOALS WITH THE HELP OF THE ARORA REPORT. You are receiving less than 2% of the content from our paid services. …TO RECEIVE REMAINING 98% INCLUDING MANY ATTRACTIVE INVESTMENT OPPORTUNITIES,
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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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