By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
Game Plan For Investors
Please click here for a chart of S&P 500 ETF (SPY) which represents the benchmark stock market index S&P 500 (SPX).
Note the following:
- The chart shows on April 21 the stock market fell and touched the low band of support zone 2. The fact that the stock market bounced after touching the low band of support zone 2 is a positive in the short term. If the stock market had broken the low band of support zone 2 that would have been a negative.
- The red candle on the chart yesterday shows the stock market was running up and close to its eventual high for the day when selling came in, resulting in the stock market pulling back.
- As a member of The Arora Report, you already knew before the market open when the stock market was still running up and close to its eventual high for the day that this would likely happen as you read in the Morning Capsule:
Our very, very short-term early stock market indicator is positive but there is a high probability that after the initial wave of aggressive buying is over, selling may come in to take advantage of the strength.
- The foregoing illustrates why The Arora Report’s proprietary very, very short term indicator is popular among investors.
- As a member of The Arora Report, you were prepared for a scenario where China’s President Xi takes advantage of President Trump’s pain point. Please read prior Morning Capsules for details. The Arora Report analysis we shared with you on April 11 has now proven spot on. We wrote:
In The Arora Report analysis, the tariff reversal has now exposed President Trump’s pain threshold to foreign leaders. Foreign leaders will take advantage of this knowledge by taking a tougher stand in negotiations with the U.S. on trade.
- Now, China is taking advantage of President Trump’s pain point.
- Yesterday morning, the stock market rallied after Trump made overtures to China and significantly softened his stance. The markets were expecting China to eagerly embrace President Trump’s significant backtracking and come running to offer a deal.
- In the early trade, the rally is losing more steam as China said there are no talks on reaching a deal. Unlike President Trump’s warm approach to China, the Chinese response is harsh. The U.S. is considering dramatically slashing China tariffs to persuade China to come to the table.
- After analyzing statements coming from Chinese officials, in The Arora Report analysis, President Xi of China is betting that Trump will back down to save face.
- In The Arora Report analysis, if President Xi is proven right that President Trump will back down to save face, it will be a big negative for the U.S. economy and the stock market in the long term. As a heads up, in such a scenario, The Arora Report call will be four-fold:
- More tactical trades and less strategic investments
- More allocation to safe havens
- More international diversification
- Buy Chinese stocks
- In the event of the foregoing, the momo crowd is not going to think ahead, and they will likely buy extremely aggressively, which will lead to a short term rip roaring rally. As a heads up, The Arora Report plan will be to take advantage of the rally with tactical trades first and sell when such a rally starts showing exhaustion.
- On the other hand, if President Trump holds his nerve, in The Arora Report analysis, after short term pain, a golden age will dawn for the U.S. economy and the stock market. In such a scenario, The Arora Report call will be:
- More strategic investments in the U.S.
- Fewer tactical trades
- Smaller allocation to safe havens
- Smaller allocation to international investments
- As powerful as President Xi is, he also has his weak points – rising debt, low consumer confidence, and 20 million people working in factors that primarily export to the U.S.
- The situation is likely to stay fluid with a wide range of outcomes possible. The best course of action for investors is to stay tuned to the Morning Capsules and the Arora Protection Band.
- The Treasury auction yesterday was mixed. Here are the results:
- $70B 5-year Treasury note auction results
- High yield: 3.995% (When-Issued: 4.005%)
- Bid-to-cover: 2.41
- Indirect bid: 64.0%
- Direct bid: 24.8%
- To learn how to read Treasury auction results, listen to the podcast titled “Treasury Auction Data: Ignore The Most Popular.”
- Initial jobless claims came at 222K vs. 220K consensus.
- Durable goods is a very volatile series. In The Arora Report analysis, the just released durable goods data is skewed by a 139% increase in non-defense aircraft parts and orders. Here are the details:
- Durable goods came at 9.2% vs. 1.5% consensus.
- Durable goods ex-transportation came at 0.0% vs. 0.3% consensus.
- As an actionable item, the sum total of the foregoing is in the Arora Protection Band, which strikes the optimum balance between various crosscurrents. Please scroll down to see the Arora Protection Band. The Arora Protection Band is one of the large number of unique edges that are available to members of The Arora Report.
Magnificent Seven Money Flows
In the early trade, money flows are positive in Amazon (AMZN) and Nvidia (NVDA).
In the early trade, money flows are neutral in Alphabet (GOOG), Microsoft (MSFT), and Meta (META).
In the early trade, money flows are negative in Apple (AAPL) and Tesla (TSLA).
In the early trade, money flows are positive in S&P 500 ETF (SPY) and Nasdaq 100 ETF (QQQ).
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 *** in the early trade.
Note for new members: Smart money often sells into the strength generated by momo crowd buying and buys into the weakness generated by momo crowd selling. Over a long period of time, investors come out ahead by adopting smart money’s ways. The exception is in a raging bull market – for very short term trades, consider following the momo crowd and not smart money. Smart money is an important indicator but is only one of hundreds of indicators that go into determining the Arora Protection Band and signals. Please click here and here to understand how signals are generated.
Very Very Short-Term Indicator
The Arora Report’s proprietary 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.
Gold
The momo crowd is *** gold in the early trade. Smart money is *** in the early trade.
For longer-term, please see gold and silver ratings.
Oil
The momo crowd is *** oil in the early trade. Smart money is *** in the early trade.
For longer-term, please see oil ratings.
Bitcoin
Bitcoin (BTC.USD) is range bound.
Markets
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.
S&P 500 futures are trading at 5405 as of this writing. S&P 500 futures resistance levels are 5500, 5622, and 5748: support levels are 5256, 5210, and 5020.
DJIA futures are down 107 points.
Gold futures are at $3351, silver futures are at $33.38, and oil futures are at $63.14.
Arora Protection Band And What To Do Now
It is important for investors to look ahead and not in the rearview mirror. The proprietary Arora Protection Band from The Arora Report is very popular. The Arora Protection Band puts all of the data, all of the indicators, all of the news, all of the crosscurrents, all of the models, and all of the analysis in an analytical framework that is easily actionable by investors.
Consider continuing to hold good, very long term, existing positions. Based on individual risk preference, consider holding *** in cash, Treasury bills, short term fixed income, 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.
A protection band of 0% would be very bullish and would indicate full investment with 0% in cash. A protection band of 100% would be very bearish and would indicate a need for aggressive protection with cash and hedges or aggressive short selling.
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.
Traditional 60/40 Portfolio
Probability based risk reward adjusted for inflation does not favor long duration strategic bond allocation at this time.
Those who want to stick to traditional 60% allocation to stocks and 40% to bonds may consider focusing on only high quality bonds and bonds of five year duration or less. Those willing to bring sophistication to their investing may consider using bond ETFs as tactical positions and not strategic positions at this time.
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.
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, TAKE A FREE
TRIAL TO PAID SERVICES.
Please click here to take advantage of a FREE 30 day trial.
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.
