SCARY HEADLINE FOR INVESTORS BUT DATA IS ACTUALLY GETTING BETTER

By Nigam Arora & Dr. Natasha Arora

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

Producer Price Index

Please click here for a chart of Producer Price Index.

Note the following:

  • The scary headline is that inflation at producer level increased at the highest rate ever since the Labor Department started compiling the data in 2010. However, the reality is that the data is getting better for investors and the economy.
    • PPI rose 9.7% year-over-year.
    • Core PPI rose 8.3% year-over-year.
    • The chart shows that the data is actually getting better as inflation is coming down at the producer level.
    • The chart shows that PPI came at 0.2% vs. 0.4% consensus month-over-month. It was at 0.8% for the prior month as shown on the chart.
    • The chart shows that Core PPI came at 0.5% vs. 0.4% consensus month-over-month.  It was 0.7% for the prior month as shown on the chart.
  • Significant buying is coming in after the release of the PPI data.
  • In our analysis, the drop in PPI in December was mostly due to a dip in oil prices at the end of November.  In December and January, oil prices have gone up.  If oil prices stay this high, PPI may move up again for the month of January.

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Jobless Claims

Initial claims came at 230K versus 202K consensus.  This is the highest number since mid-November.

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

 sees oil prices dropping in 2022 and 2023.  Momo crowd is dismissing the  report.  Prudent investors should pay attention to the EIA report because it is authoritative and often correct.

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 $1822, silver futures are at $23.23, and oil futures are $92.43.

S&P 500 futures resistance levels are 4770, 4826, and 4900: support levels are 4713, 4600, and 4460.

 futures are up 128 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, 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, 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.

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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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