MONEY RUSHING INTO SAFE HAVENS AS WALL STREET’S CALLOUS CALCULATION BLOWS UP

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By Nigam Arora & Dr. Natasha Arora

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

Market Mechanics

Please click here for a chart of West Texas Intermediate crude oil futures (CL_F).

Note the following:

  • The chart shows that oil is jumping after a blast at a hospital in Gaza killed a large number of civilians.
  • Iran is calling for an oil embargo against Israel.
  • In The Arora Report analysis, given the presence of two US aircraft carrier groups near Israel, there is no chance of a potential oil embargo succeeding. 
  • Iran is also calling for Islamic countries to sanction Israel.
  • Arab leaders have canceled President Biden’s Jordan summit in reaction to the blast at the hospital in Gaza.
  • In The Arora report analysis, even though Arab countries such as Egypt and Jordan are dependent on US financial aid, and Gulf countries are dependent on the US for security, Arab leaders do not want to appear to be cooperating with Biden.  The reason is that Arab leaders are afraid of unrest in their own countries and losing power.  The outrage among their own populations over the hospital blast and continued bombardment of Gaza is approaching a boiling point.
  • Prudent investors should pay attention to political instability that may develop if the carnage in Gaza continues and there is no humanitarian relief for innocent people who are running out of food and water.  In The Arora Report analysis, if political instability develops, oil prices will jump.
  • For investors, it is important to note that the hospital blast has blown Wall Street’s callous calculation.  It is Wall Street’s callous calculation along with market mechanics that are responsible for the recent rise in the market.  Please read prior Capsules regarding Wall Street’s callous calculation.
  • Money is moving into safe havens of gold and Treasury bonds.  In spite of money rushing into Treasuries, bonds are still falling due to the Bank of Japan speculation.  Please scroll down to the Japan section.
  • For the new members, gold ETF (GLD) and its buy zone are in the Model Portfolios in ZYX Allocation.  Silver ETF (SLV) and gold miner Newmont (NEM) are in the Core Model Portfolio in ZYX Buy.
  • Even though Wall Street’s callous calculation is blown, powerful market mechanics are still in place attempting to drive the stock market higher.
  • US sanctions on the export of AI technology and chips to China are beginning to have an impact.  The Dutch company, ASML (ASML) is a bellwether and is the dominant supplier of ultra lithography machines that are needed for advanced chips.  ASML is warning of a flat 2024 and headwinds ahead due to US sanctions on China.  Please see prior Capsules regarding details of US sanctions on China.
  • Fed’s Beige Book will be released at 2pm ET.
  • 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.
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Housing

Due to most homeowners having locked in lower interest mortgages, there is very little supply of existing homes for sale.  For this reason, the business of new home builders is booming.  The new home activity is slowing.  Here is the new data.

  • Housing starts came at 1.358M vs 1.380M consensus
  • Building permits came at 1.473M vs 1.448M consensus

China

The Chinese economy is doing better than expected.  Here are the details of the new data:

  • Q3 GDP came at 1.3% quarter over quarter vs 1.0% consensus
  • Industrial production came at 4.5% year over year vs 4.3% consensus
  • Retail sales came at 5.5% year over year vs 4.9% consensus

Japan

In The Arora Report analysis, even investors who do not like to think beyond the US, need to pay close attention to the Bank of Japan (BoJ).  The reason is that the BoJ’s policy is about to shift and it will have a major impact on the US stock and bond markets.  We have previously shared with you the reasoning behind the importance of paying attention to the BoJ.

In The Arora Report analysis, part of the recent rising yields that have impacted the stock market is due to speculation about the BoJ’s future actions.

The BoJ conducted an unscheduled bond buying operation.

Rumors are that the BoJ will raise its inflation forecast for FY23 to 3.0%.

Magnificent Seven Money Flows

In the early trade, money flows are positive in Microsoft (MSFT).

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

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In the early trade, money flows are negative in S&P 500 ETF (SPY) and negative in 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.

Gold

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

For longer-term, please see oil ratings.

Bitcoin

Estimates are that the approval of a bitcoin (BTC.USD) ETF may add $1T to bitcoin market cap.  This speculation is bringing in buying in bitcoin.

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 $1961, silver futures are at $23.34, and oil futures are at $86.59.

S&P 500 futures are trading at 4380 as of this writing.  S&P 500 futures resistance levels are 4400, 4460, and 4600: support levels are 4318, 4200, and 4000.

DJIA futures are down 49 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.

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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.

To take a free 30-day trial to paid services to gain access to more opportunities, please click here.

This post was just published on ZYX Buy Change Alert.

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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.

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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