BULLISHNESS CREATED BY BANK OF CANADA TURNING DOVISH BALANCED BY RECESSION FEARS AND PUTIN WARNING

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

Bank of Canada Turns Dovish

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 the stock market attempting a muted rally in the morning.  Selling came in after 11am ET, dampening the rally.
• The momo crowd is selling as they are taking heavy losses from aggressively buying near the top last week on momo gurus’ highly flawed narrative.  To learn about the flaws, please see prior capsules.
• Selling came in, in part, in response to Putins’ warning that the risk of broader war is now higher.  Putin warned that if Russian territory is attacked, Russia will defend with all means available including nuclear.
  • This is especially important since Ukraine has recently attacked three bases deep within Russia using drones.  Apparently, these drones are not supplied by the U.S.
  • The U.S. has been trying very hard to persuade Ukraine to not attack Russian territory to prevent escalation of war.
  • There are reports that the U.S. has secretly modified sophisticated rocket launchers that it supplied to Ukraine so that these rocket launchers cannot be used to fire on Russian territory.
• The momo crowd is oblivious but prudent investors should keep a careful watch if Ukraine continues to attack deep within Russian territory as that may lead to war escalation.  
• Going into the Bank of Canada’s (BoC) rate decision, economists were split between 25 bps and 50 bps.
  • BoC raised the interest rate by 50 bps.
  • BoC has made a dovish pivot by stating that there may not be a need for further rate increases.
• Stock market bulls are hopeful that the Fed will behave similar to BoC.   Those who believe in this argument are buying stocks.
• Warnings from a number of CEOs of major companies and layoffs expanding beyond the bloated tech sector are raising fears of a recession among investors, who until recently claimed that there would not be a recession.
• To be successful in the markets, consider not taking an absolute position that there will be a recession or there will not be a recession.  When you take absolute positions and you are wrong, this leads to major losses. Further, start with Arora’s Second Law of Investing and Trading which states, “Nobody knows with certainty what is going to happen next in the markets.”  Considering that the economy is very complex and several upcoming events can totally change the course, isn’t it arrogant for anyone to claim that they know for certain that there will or will not be a recession.
• Consider following Arora’s Third Law of Investing and Trading: “Making investing and trading decisions based on probabilities is the only realistic and profitable approach.”  Those who have incorporated Arora’s Thirty Laws into their trading and investing have done considerably better than those who have not.   Due to their very high value when used synergistically, Arora’s Thirty Laws are carefully guarded and are proprietary.  These laws are available only to The Arora Report members.  To learn about these laws that will totally transform your trading and investing for the better, consider attending the Bulletproof seminar.
• In The Arora Report analysis, there is a 70% probability of a recession in the U.S. and a 90% probability of a recession in Europe. 
• 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 was mostly green this morning, indicating net demand for stocks, but has turned mixed as of this writing.

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.

Close

Orders on close are 🔒 as of this writing.

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.

Gold

Buying in silver is 🔒.  

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

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

Oil

Oil is suffering major losses even though inventory data was bullish.

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

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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.