By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
Record Quad Witching
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 has pulled back from the bottom band of zone 1 (resistance). Zone 1 has been the magnet for traders.
- RSI on the chart shows the stock is neither overbought nor oversold. RSI on the chart shows internal momentum in the stock market is slowing.
- Quadruple witching is today. A record $6T notional value of derivatives will expire. In quadruple witching, stock index futures, futures options, stock options, and single stock futures expire. Quadruple witching often leads to volatility.
- In The Arora Report analysis, quadruple witching has been exerting upward pressure on the stock market this week. It may continue to put upward pressure on the stock market today.
- In The Arora Report analysis, the upward pressure from quadruple witching is one of the reasons the stock market has been so resilient in the face of the Israel Iran war.
- Europe and Iran are set to meet today for high level talks, the first since the war started. Europe will make an offer to Tehran that will require Iran ceasing uranium enrichment. There is aggressive stock buying on an unconfirmed rumor that Iran is willing to accept restrictions on uranium enrichment.
- President Trump has indicated that the U.S. will decide to join the war or not “within two weeks.”
- An important piece of information for prudent investors comes from satellite images that the media is not highlighting. Satellite images show that the Israeli attacks on the nuclear facility at Natanz has primarily damaged transformers and the switchyard. This damage can be quickly repaired. At The Arora Report, we are not military experts. Based on our sources, the main reason President Trump may have backed off from bombing Fordow is the satellite images showing the Israeli attacks caused minimal damage to Natanz. Natanz is not fortified like Fordow.
- Investors need to be very careful about reports in the media. These reports are likely full of deception.
- Leading indicators will be released at 10am ET and may be market moving.
- 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.
Switzerland
On previously flat inflation pushing into the negative, the Swiss National Bank cut interest rates by 25 bps, dropping to 0%. The decrease in inflation appears to be due to falling prices in oil (before the Israel Iran war started) and tourism.
England
The Bank of England (BOE) announced the interest rate will not change, remaining at 4.25%, as expected.
Magnificent Seven Money Flows
In the early trade, money flows are positive in Amazon (AMZN), Meta (META), and Tesla (TSLA).
In the early trade, money flows are neutral in Apple (AAPL), Alphabet (GOOG), Microsoft (MSFT), and Nvidia (NVDA).
In the early trade, money flows are negative in S&P 500 ETF (SPY) and positive Nasdaq 100 ETF (QQQ).
Momo Crowd And Smart Money In Stocks
The momo crowd is aggressively buying stocks in the early trade. Smart money is inactive 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 *** (To see the locked content, please take a 30 day free trial). 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 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.
S&P 500 futures are trading at 6051 as of this writing. S&P 500 futures resistance levels are 6131, 6256, and 6500: support levels are 6017, 5926, and 5748.
DJIA futures are up 12 points.
Gold futures are at $3361, silver futures are at $36.03, and oil futures are at $73.27.
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.
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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.
