By Nigam Arora & Dr. Natasha Arora
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.’
SKEPTICS OF ‘IN FED WE TRUST’ CRUSHED – BOND SHORT SQUEEZE
To gain an edge, this is what you need to know today.
A Vicious Bond Short Squeeze
Please click here for a chart of Nasdaq 100 ETF (QQQ).
Note the following:
- A vicious short squeeze has taken place in bonds. Skeptics of ‘In Fed we trust’ have been short-selling bonds.
- Bond short-sellers have all the hard data to support them. Inflation is rising. As inflation rises, interest rates should go up. When interest rates go up bonds go down.
- As the hard data confirmed rising inflation, interest rates have fallen and bonds have risen due to the short squeeze.
- Many market participants are not understanding that the reason for the rise in bonds is a technical one and not based on the lack of inflation. This is causing positive sentiment in stocks.
- The chart shows that QQQ has now broken above the breakout line and is close to the resistance.
- It is a Friday. Friday leads to short squeezes. It will not take much of a short squeeze for QQQ to reach a new high and confirm new highs in other indices.
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 up and bonds are ticking down after a sharp rally in bonds.
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 $1889, silver futures are at $28.31, and oil futures are $70.29.
S&P 500 futures resistance levels are 4318 and 4400: support levels are 4200, 4000, and 3950.
DJIA futures are up 94 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.
‘IN FED WE TRUST’ – MOMO BUYING ON CORE INFLATION RATE OF 8.4%
To gain an edge, this is what you need to know today.
‘In Fed We Trust’
Please click here for a chart of Nasdaq 100 ETF (QQQ).
Note the following:
- The chart shows that yesterday QQQ failed again at the breakout line.
- The chart shows that buying in the early trade may lead to a breakout above the line shown.
- Core Consumer Price Index (CPI) for May came at 0.7% vs. 0.4% consensus. Keep in mind that this is an annual rate of 8.4%.Headline CPI came at 0.6% vs. 0.4% consensus.
- In theory, these hot inflation numbers should cause a selloff in both the stock and bond markets. But for that to happen, the momo crowd will need to know the theory and the history – that is not the case.
- Smart money knows from history that the Fed is prone to make mistakes at critical junctions. Historically, the Fed often falls behind the curve.
- Smart money is also concerned because they know the Fed’s claim of inflation being transitory may turn out to be wrong.
- The momo crowd is fearless – they are aggressively buying on the higher than expected inflation numbers. Why? The momo crowd trusts the Fed.
Jobless Claims
Initial Jobless Claims came at 376K vs. 365K consensus.
Meme Crowd
The meme crowd was disappointed when GME conference call lasted only 12 minutes and new initiatives were not announced. GME hired two Amazon (AMZN) executives as CEO and CFO. GME is down about 5% but that is not deterring the meme crowd. They have minted three new meme stocks – CLF, WWE, and MDLY.
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 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.
Gold futures are at $1895, silver futures are at $28.00, and oil futures are $70.40.
S&P 500 futures resistance levels are 4318 and 4400: support levels are 4200, 4000 and 3950.
DJIA futures are up 149 points.
RECORD JOB OPENINGS – BIDEN AND POWELL BURY THEIR HEADS IN THE SAND
To gain an edge, this is what you need to know today.
Record Job Openings
Please click here for a chart of Nasdaq 100 ETF (QQQ).
Note the following:
- The chart shows that yesterday the bulls tried to break above the breakout line but failed.
- The chart shows that in the early trade, bulls are trying again to break above the breakout line.
- According to JOLTS there are 9.3 million unfilled job openings in the U. S. The consensus was 8.0 million job openings. The number of job openings is a record ever since this data has been tracked from the year 2000.
- Many states have curtailed enhanced job benefits because governors of those states determined that small businesses were being hurt because they could not fill job openings. It made no sense to pay workers more in unemployment than they made before the pandemic started.
- Biden insists on paying people more not to work than they made before the pandemic started without any requirement to look for work.
- Powell is printing $120 billion a month. With the newly printed money, in part, he is buying bonds of rich corporations like Apple who do not need any government help. Apple in turn uses the Fed’s generosity to buy back its stock. How does the Fed justify this continued money printing? The Fed claims that it continues to print money at an unprecedented rate and to buy bonds to help the little guys because there are no jobs to be found.
- In the short term, for investors, it is a good thing that Biden and Powell have their heads buried in the sand – they are pumping more air in this stock market bubble. If Biden or Powell were to pull their heads out of the sand, investors should get concerned because there would not be as much air being pumped by the government to inflate the stock market bubble.
- Pay attention to ‘Protection Bands and What To Do Now?’ section below.
9% Factory Inflation In China
In China, PPI that measures factory inflation rose 9% in May year-over-year. This is the fastest growth since September 2008. The consensus was 8.5%.
Remarkably, CPI increased by only 1.3% vs. 1.6% consensus. The Chinese government is committed to not letting factory inflation be passed on to consumers in China. If inflation rises in the U. S., what will the U. S. government do?
Bond Short Squeeze
There is a vicious short squeeze occurring in bonds driving bond prices higher and interest rates lower.
Meme Stocks
Meme stocks mania continues. The two newly minted meme stocks are WISH and CLNE. Biotech stock CLVS is being bought aggressively as some in the meme crowd are mistakenly buying this symbol in their attempt to buy the meme stock CLOV.
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 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.
Gold futures are at $1897, silver futures are at $27.98, and oil futures are $70.33.
S&P 500 futures resistance levels are 4318 and 4400: support levels are 4200, 4000 and 3950.
DJIA futures are down 4 points.
MOMO CROWD EXCITED AS MEME STOCK UNIVERSE EXPANDS, BITCOIN LOSES ONE OF ITS CHARMS
To gain an edge, this is what you need to know today.
Meme Universe Expands
Please click here for a chart of Nasdaq 100 ETF (QQQ).
Note the following:
- We have previously shared with you that the momo crowd has now become driven by FOMO (fear of missing out) and following the meme crowd.
- With the momo crowd following the meme crowd, the meme crowd is able to drive stocks higher than before.
- The emboldened meme crowd has now expanded its list of stocks. The two prominent newly minted meme stocks are WEN and CLOV. Who would have thought that Wendy’s would become a meme stock?
- The chart shows that QQQ is now right up against the breakout line. The market will experience some resistance here. However, if meme stock excitement continues, expect momo buying to cut through the resistance.
- Sophisticated investors who know that the meme crowds’ behavior is illogical, can no longer ignore the meme crowd because the meme crowd has become a force and indirectly moves the entire market.
Bitcoin Loses One Of Its Charms
Money is moving out of bitcoin into meme stocks as bitcoin loses one of its charms.
One of bitcoin’s charms has been that the Feds cannot track bitcoin. Now the news is that the FBI has recovered a majority of the ransom paid in bitcoin by Colonial Pipeline to hackers.
Momo Crowd And Smart Money In Stocks
The momo crowd is 🔒 stocks in the early trade. Smart money is 🔒.
Gold
The momo crowd is 🔒 in 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 $1898, silver futures are at $27.81, and oil futures are $68.86.
S&P 500 futures resistance levels are 4318 and 4400: support levels are 4200, 4000, and 3950.
DJIA futures are up 17 points.
INVESTORS DO NOT LIKE UNPRECEDENTED DEAL TO STOP CORPORATIONS FROM SCHEMING TO AVOID TAXES
To gain an edge, this is what you need to know today.
Unprecedented Deal
Please click here for a chart of Nasdaq 100 ETF (QQQ) minimum tax
Note the following:
- For a long time, large corporations have been successfully scheming to avoid taxes using foreign tax havens.
- An important item on Biden’s agenda has been to stop wealthy corporations from avoiding taxes.
- Biden has been calling for a minimum corporate tax.
- The gurus had given Biden no chance of succeeding with G-7 (an informal club of seven wealthy nations) because of the power of the corporations.
- Now the first step has been taken proving the gurus wrong.
- The G-7 has reached an unprecedented deal to impose a global minimum 15% tax on corporations.
- The deal is likely to be presented to G-20 in about a month.
- The biggest obstacle to the deal is the U. S. Congress.
- Initially, investors did not like the deal and there was a slight downdraft in the stocks of companies that will be affected in the early trade. However, investors are now buying these companies confident that the U. S. Congress will stop any attempt to make wealthy corporations pay 15% minimum tax.
- We will be publishing a list of stocks and ETFs in the portfolios that will potentially be adversely affected if the opposition in the U. S. Congress can be overcome.
Bitcoin
In an unprecedented move, El Salvador has become the first country to accept bitcoin as legal tender.
In another unprecedented move, the governor of Texas is jumping on the bitcoin bandwagon.
On the negative side, China is continuing to crack down on bitcoin by blocking cryptocurrency accounts on Weibo. Weibo is like Twitter in the United States.
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 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.
Gold futures are at $1892, silver futures are at $27.83, and oil futures are $69.41.
S&P 500 futures resistance levels are 4318 and 4400: support levels are4200, 4000 and 3950.
DJIA futures are up 66 points.
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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.
