By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
Good News
Please click here for a chart of semiconductor ETF (SMH).
Note the following:
- There is good news from Pfizer this morning. Three doses of the vaccine neutralize omicron in laboratory tests.
- It is not known if this positive data from the lab will hold up in real life.
- There are many cases of people with three doses being infected with omicron.
- To understand the market behavior, investors should pay attention to the market reaction to the news.
- Yesterday near the close, news came from South Africa that there was a 41 fold drop in the antibodys’ capacity to neutralize omicron compared with the original virus. This was a small study of 12 vaccinated people with two doses of vaccine.
- The stock market initially pulled back on the news as this was bad news.
- The momo crowd came rushing to buy the tiny dip.
- After hours and through the night, the momo crowd was an aggressive buyer of stock futures because they perceived the bad news on vaccine would prompt the Fed to possibly not accelerate taper.
- Earlier this morning, smart money started selling the strength in stock futures. The reasoning was twofold. First, the market had become overbought in the very, very short term. Second, the smart money believes that the Fed will accelerate the taper irrespective of the virus.
- Then came the good news from Phizer that three doses of vaccine neutralize omicron.
- First, there was aggressive buying on the news, but since then, the market is pulling back on concerns about the Fed and upcoming inflation data.
- The foregoing illustrates the push and pull that is going on in the stock market between the momo crowd and non-momo investors. The two groups have very different perspectives here.
- Given the push and pull, investors should consider watching semiconductors for the future direction of the stock market.
- The chart shows that semiconductors have just traced a bullish pattern.
- The chart shows that semiconductors closed above the prior high. Semiconductors are outperforming other groups.
- The chart shows that the prior intraday high is nearby.
- The chart shows that RSI for semiconductors is tracing a bullish pattern.
Momo Crowd And Smart Money In Stocks
The momo crowd is 🔒 (To see the locked content, please take a 30 day free trial) stocks. Smart money is 🔒.
Gold
The momo crowd is 🔒. Smart money is 🔒.
For longer-term, please see gold and silver ratings.
Oil
API showed a surprise crude draw of 3.089M barrels vs. consensus of a build of 2.093M 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 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 $1783, silver futures are at $22.38, and oil futures are at $72.20.
S&P 500 futures resistance levels are 4713, 4770, and 4900: support levels are 4600, 4460, and 4400.
DJIA futures are up 23 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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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.
