WEEKLY STOCK MARKET DIGEST: PRUDENT INVESTORS PAY ATTENTION TO THIS CHART — EXCITEMENT ABOUT BIDEN’S TRILLIONS

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.’

SLIGHT DISAPPOINTMENT WITH BIDEN’S $1.9 TRILLION

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

Slight Disappointment

Please click here for a chart of  M1 money supply

Note the following:

  • M1 money supply is a narrow measure that consists of the most liquid part of the money supply such as cash and checking accounts.
  • M1 is not used for monetary policy because it has not correlated with economic data.
  • Right now for investors, the most important factor is the behavior of the momo crowd.
  • The chart shows a recent rapid rise in the M1 money supply.
  • The recent sharp rise in M1 is directly correlating with the aggressiveness of speculation by the momo crowd.
  • In plain English, the foregoing means that the more liquid money the momo crowd has, the more aggressively they buy.
  • Biden released his $1.9 trillion borrowing and spending plan.
  • As aggressive as Biden’s plan is, momo crowds’ gurus had expected it to be even more aggressive.
  • Yesterday we wrote:

If Biden’s package has some prudence in it, the momo crowd will likely be disappointed and the market may experience selling.

  • By making the package $1.9 trillion instead of $2 trillion, Biden clearly wanted to create the illusion of prudence.

Retail Sales

Retail Sales Exauto came at -1.4% vs. -0.2% consensus. It is not that retail sales were weak, it is that analysts were too aggressive in increasing their estimates.

Producer Price Index (PPI)

Core PPI came at 0.1% vs. 0.1% consensus.   We expect PPI to rise over the coming months.

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 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 $1841, silver futures are at $24.92, and oil futures are $52.76.

S&P 500 futures resistance levels are 3800, 3860 and 4000: support levels are 3630, 3600 and 3520.

DJIA futures are down 201 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.

MOVE IN AGRICULTURAL COMMODITIES, WAIT FOR BIDEN’S TRILLIONS

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

Inflation

Please click here for a chart of agricultural commodities ETF ().

Note the following:

  • The momo crowd is excited waiting for details of trillions of dollars that Biden wants to borrow.  Biden is scheduled to release his stimulus plan today. The prevailing wisdom is that the plan will include direct payments for those who have suffered no harm due to coronavirus and whose incomes have gone up.  The plan supposedly will include massive welfare for rich corporations.
  • If Biden’s package has some prudence in it, the momo crowd will likely be disappointed and the market may experience selling.
  • The government says that there is no food inflation.  Anybody who wants to eat healthy knows better.
  • The chart shows that the prices of agriculture commodities are rising fast.  The top holdings of the ETF are soybeans, sugar, cocoa and corn.

Jobless Claims

Initial Jobless Claims came at 965K vs. 780K consensus.

Momo Crowd And Smart Money In Stocks

The momo 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 range bound.

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 $1838, silver futures are at $25.31, and oil futures are $52.43.

S&P 500 futures resistance levels are 3860 and 4000: support levels are 3800, 3630 and 3600.

DJIA futures are up 98 points.

INFLATION UNDER CONTROL BUT LIKELY TO RISE

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

Inflation

Please click here for a chart of the Consumer Price Index (CPI)

Note the following:

  • Over the last 10 years, inflation has been under control per the government’s numbers.
  • In our analysis, the government’s measurement methodology is wrong.  You all have experienced inflation in healthcare, housing, education and services.
  • Inflation in goods has been kept in check due to globalization.
  • There are many early signs of inflation that are likely to show up in CPI in the near future.
  • Inflation is one potential consequence of excessive money printing and excessive borrowing.
  • December CPI headline number came at 0.4% vs. 0.4% consensus.
  • December Core CPI came at 0.1% vs. 0.1% consensus.
  • Inflation can have a devastating impact on investors.  Stay tuned for future posts to protect yourself.

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 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 $1858, silver futures are at $25.44, and oil futures are $53.58.

S&P 500 futures resistance levels are 3800, 3860 and 4000: support levels are 3630, 3600 and 3520.

DJIA futures are down 34  points.

MOMO EXCITED ABOUT BIDEN’S TRILLIONS — PRUDENT PAY ATTENTION TO THIS CHART

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

Biden’s Trillions 

Please click here for a chart of bond ETF ()

Note the following:

  • When it comes to borrowing, Biden does not talk about billions, he talks about trillions.  In history, no other American president has ever talked about borrowing such huge amounts without any public expression of hesitation or concern.
  • You already know that the momo crowd loves borrowing and spending.  The stock market rise is based on borrowing and money printing.
  • Prudent investors should take a careful look at the chart of bonds.
  • The chart shows a breakdown.
  • Bonds move inversely to interest rates. In plain English, interest rates are rising.
  • We have previously written:

The most common question we are asked, “What will cause the stock market bubble to burst?”   The answer is that if the Fed loses control of the market, the bubble will burst.

One of the early indications of the Fed losing control will show up in a bond chart.

  • The Fed is nowhere near losing control.  The Fed can simply engage in yield curve control by printing more money and buying more bonds.
  • Biden may make announcements later this week related to spending trillions of dollars in the future. Such announcements may spike the stock market.

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 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 $1843, silver futures are at $25.26, and oil futures are $62.77.

S&P 500 futures resistance levels are 3800, 3860 and 4000: support levels are 3630, 3600 and 3520.

DJIA futures are up 24 points.

U. K. REGULATOR WARNING — ‘LOSE ALL THEIR MONEY’ DAMPENS MOMO SENTIMENT

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

‘Lose All Their Money’

Please click here for a  chart of Bitcoin futures .

Note the following:

  • We were sharing with you late last week that sentiment had reached the beginning of the extreme zone.  Our long time subscribers already know that when sentiment reaches extreme positive it is a sell signal.  However, as a note of caution, the signal is not precise in its timing and sentiment can move farther into the extreme zone.
  • The other important point about sentiment is that it is a sell signal only if it stays in the extreme zone for a while.  Historically, often the sentiment moves back from extreme to very positive zone. Such a move gives a new life to the momo crowd.
  • A common reason for the sentiment to move back from the extreme zone is that a regulator expresses concern.
  • Bitcoin has been emblematic of the speculative fever that has gripped the momo crowd.
  • The U. K. Financial Conduct Authority has issued a warning regarding Bitcoin, “If consumers invest in these types of products, they should be prepared to lose all of their money.”
  • The chart shows the impact of the statement.
  • The chart shows that Bitcoin lost as much as 21% of its value in a very short time.
  • The chart shows that the VUD indicator has been mostly orange indicating net supply of Bitcoin. 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 negative sentiment from Bitcoin has crossed over to several momo stocks.  The reason is that a large number of investors who have lately been buying Bitcoin are the same ones who are buying frothy momo stocks.
  • The best way to understand the move in Bitcoin today is to think of a doctor giving Tylenol to reduce a fever.  A short time afterward, Tylenol wears off and the fever may spike back if there is no other treatment for fever.
  • Here we have the Congress, the President-Elect and the Fed doing everything they can to spike the fever.

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 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 $1835, silver futures are at $24.87, and oil futures are $51.60.

S&P 500 futures resistance levels are 3800, 3860 and 4000: support levels are 3630, 3600 and 3520.

DJIA futures are down 310 points.

 

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