By Nigam Arora & Dr. Natasha Arora

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

Raise Cash And Hedges

You may recall that in the beginning of November, there were Arora signals to deploy cash and reduce hedges.  Those signals have proven spot on as the stock market ran up significantly after those calls.

On December 27, the Arora signal was to start taking profits on tactical positions.  So far, December 28 has turned out to be the top in Nasdaq 100 and, more importantly, in speculative stocks.  The Arora signal has been to continue taking profits on tactical positions.

The new Arora signal is to slightly raise cash and hedges.

When you continue making adjustments based on the new data, it can add up to very significant additional returns over your lifetime.

There are three immediate triggers behind this call:

  • Retail sales data
  • Data from China.
  • The probability of a rate cut in March in swap markets falling to 65% from 80%
  • Rising dollar

To learn more about the adaptive system, with inputs in ten categories, please click here.  In plain English, adaptive means the system automatically changes itself in response to changing market conditions.

For details, please see the section titled “Protection Band And What To Do Now” below.   There will be a separate post on hedges.

Speculative Sentiment

Please click here for a chart of bitcoin miner Marathon Digital stock (MARA).

Note the following:

  • The Morning Capsule is about the big picture, not an individual stock.  The chart of MARA is being used to illustrate the point.
  • Lately bitcoin has been a leading indicator of speculative sentiment in the stock market.  For this reason, you need to pay attention to bitcoin even if you are not interested in bitcoin.  
  • The chart shows when 11 spot bitcoin ETFs were approved.
  • The chart shows a 40% drop in MARA since the approval.
  • Stock market bears are interpreting these moves as money exiting bitcoin.
  • In The Arora Report analysis, this interpretation by stock market bears is wrong as the data indicates otherwise.  In The Arora Report analysis, money is simply shifting in bitcoin and bitcoin related assets.  
    • About $1.4T has moved in low cost bitcoin ETFs.
    • About $500M have moved out of high cost ETF GBTC.
    • About $100M have moved out of bitcoin miners and other bitcoin related stocks.
    • On a net basis, money has moved into bitcoin.
  • Irrespective of your opinion of bitcoin, money is to be made in bitcoin, both from the long and short sides.  The prerequisite to consistently making money in bitcoin is to understand the secrets of bitcoin whales.  To provide you with next level knowledge, a podcast titled “WHALES’ SECRETS YOU NEED TO KNOW: CAPTURING BITCOIN PROFITS PART 1” is now live in Arora Ambassador Club.
  • Data from China was disappointing.  Please see the section below.
  • Retail sales came hotter than expected.  This means the consumer continues to spend.  This data goes against the market consensus of immaculate everything – the landing, the Fed, interest rates, earnings, adoption of AI, Russia, China, and the Middle East. Here are the details:
    • Headline retail sales came at 0.6% vs. 0.4% consensus.
    • Retail sales ex-auto came at 0.4% vs. 0.2% consensus.
  • The Fed’s Beige Book will be released at 2pm ET.
  • In late 2023, a statement by the Fed’s Christopher Waller triggered stock and bond market rallies when he unexpectedly talked about potential rate cuts in 2024.  The market has been eagerly waiting for his new comments.  Waller’s new comments disappointed the market as he was more hawkish than the consensus.  Waller sees no need to quickly cut rates.
  • There is more Fed speak that might move the stock market.  Speakers include John Williams and Michelle Bowman.
  • Among important earnings, earnings from Charles Schwab (SCHW) and Interactive Brokers (IBKR) are disappointing.
  • As an actionable item, the sum total of the foregoing is in the protection band, which strikes the optimum balance between various crosscurrents.   Please scroll down to see the protection band.


Stocks in Hong Kong fell 3.7% on disappointing data.

  • China’s Q4 GDP came at 1.0% quarter-over-quarter vs. 1.0% consensus.  GDP came at 5.2% year-over-year vs. 5.3% consensus.  In The Arora Report analysis, this data is not reliable.  In The Arora Report analysis from the other data, the economic growth is likely around 4%.
  • Retail sales came at 7.4% year-over-year vs. 8.0% consensus.
  • Most troubling, house prices in major Chinese cities fell by 0.4% in December month-over-month.

Magnificent Seven Money Flows

In the early trade, money flows are positive in Nvidia (NVDA).

In the early trade, money flows are negative in Amazon (AMZN), Microsoft (MSFT), Alphabet (GOOG), Meta (META), Tesla (TSLA), and Apple (AAPL).

In the early trade, money flows are negative 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 *** stocks in the early trade.


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.


The momo crowd is *** oil in the early trade.  Smart money is *** oil in the early trade.

For longer-term, please see oil ratings.


Please see above.


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 $2025, silver futures are at $22.86, and oil futures are at $70.64.

S&P 500 futures are trading at 4766 as of this writing.  S&P 500 futures resistance levels are 4826, 4852, and 4918: support levels are 4713, 4600, and 4460.

DJIA futures are down 174 points.

Protection Band And What To Do Now

It is important for investors to look ahead and not in the rearview mirror.

Consider continuing to hold good, very long term, existing positions. Based on individual risk preference, consider holding *** in cash or Treasury bills 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.


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 seven 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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Picture of 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.

Picture of 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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