By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
Breakout
Please click here for a chart of Nasdaq 100 ETF (QQQ).
Note the following:
- The chart shows that after backing and filling, Nasdaq has broken out again.
- The chart shows the breakout is on low volume.
- This indicates a lack of conviction.
- The pattern lately has been that the volume is high on down days and low on up days. This indicates that as the market goes higher, distribution is taking place. Ideally, when the market goes higher accumulation should take place.
- The chart shows RSI divergence. In plain English, this means that as the price has gone higher momentum has not. This is a negative and often a precursor to a pullback.
The Best Two Weeks
Seasonality does not always work. Nonetheless, investors should pay attention to seasonality. Based on seasonality, next week investors will get in the holiday mood ahead of Independence Day and buy stocks. Seasonally, the next two weeks are often the best two weeks of the year.
Europe
Business growth in Europe has accelerated at the fastest rate in 15 years. IHS Markit’s Composite Purchasing Managers’ Index came at 59.2 vs. 58.8 consensus.
The U. S. PMI
The U. S. Purchasing Manager’s Index (PMI) will be released at 9:45 am ET. It may move the markets.
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
API came at a draw of 7.199M barrels vs. consensus of a draw of 3.94M barrels.
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 $1785, silver futures are at $26.03, and oil futures are $73.73.
S&P 500 futures resistance levels are 4318 and 4400: support levels are 4200, 4000, and 3950.
DJIA futures are up 56 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.
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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.
