SHOCKING PRODUCTIVITY DATA KILLS THE RALLY

By Nigam Arora & Dr. Natasha Arora

Editor’s note: This post was made available to paying subscribers in real time yesterday.

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

Productivity Data Kills The Rally

Please click here for a chart of S&P 500 ETF (SPY) which represents the benchmark stock market index S&P 500 (SPX).

Note the following:

  • In the Morning Capable we wrote,

A Shocker

Productivity-Prelim came at -7.5% vs. -2.8% consensus.  This is a shocking piece of new data.  In the past, the U.S. has overcome difficult circumstances because of rising productivity.  This time productivity is falling by a shocking amount.

  • We have previously warned you that stagflation was the single most significant  important threat to your portfolio. We have previously written that all investors should increase their knowledge about stagflation.  Lately we have been providing you with information to increase your knowledge about stagflation, such as this chart of Dow Jones Industrial Average from 1967 – 1982.  You have already seen several changes to the Model Portfolios.  You will be getting many new short term trades as the signals are given.  Based on your requests, we have also started a podcast series on stagflation for those who want next level information.
  • The productivity data this morning was the first solid piece of evidence strengthening the case that stagflation may be coming. 
  • Stagflation, if it occurs, will provide significant opportunities to profit, but investors will need to follow a strategy different from what they are used to over the last 13 years. 
  • The chart shows when the productivity data was released.
  • The chart shows that ever since the productivity data was released, the market has been going downhill.
  • It is not only the stock market, but long bonds are being aggressively sold.
  • It is very  difficult for those who have followed the traditional Wall Street approach of a 60/40 portfolio. In such a portfolio 60% is allocated to equities and 40% to bonds.  The allocation to bonds is supposed to hedge losses in stocks.
    • Now, both stocks and bonds are experiencing huge losses.
    • Those who believed bonds could act as a hedge have clearly been wrong.
  • The Arora Report envisioned the scenario ahead of time in which stocks would lose money and bonds would lose money.  This is the reason that The Arora Report helped its members transition to cash and Treasury bills from long bonds well ahead of this carnage.
    • The foregoing is a remarkable achievement and one of the best calls because the bench market for protection bands is a 60/40 portfolio.
  • The VUD indicator is the most sensitive measure of net supply demand in real-time. The orange represents net supply and the green represents net demand.
  •  The VUD indicator is solid orange, indicating net supply of stocks.

Money Flows

The momo crowd money flows since the Morning Capsule are 🔒 (To see the locked content, please take a 30 day free trial).

Smart money flows since the Morning Capsule are 🔒.

Short squeeze money flows are 🔒.

A Special Note To New Subscribers

Note the smart money behavior.  Smart money tends to sell into strength on strong up days.

New subscribers should consider adopting smart money’s way of investing and trading.

Sentiment

Sentiment is 🔒.

Sentiment is a contrary indicator at extremes.  In plain English, this means that when sentiment becomes extremely positive it is time to sell and when sentiment becomes extremely negative it is time to buy.

Close

There appear to be sell on close orders.

There is merit to watching the pattern of market on close orders as they represent the day’s dominant net cumulative activity by many professionals and funds.

Gold

The momo crowd money flows in gold are 🔒since the Morning Capsule.

Smart money flows are 🔒in gold since the Morning Capsule.

Oil

The momo crowd money flows in oil are 🔒 since the Morning Capsule.

Smart money flows in oil are 🔒 since the Morning Capsule.

Buy Zones And Buy Now Ratings

🔒

Nibbling

🔒

This post was published yesterday in The Arora Report paid services.  Since then the Morning Capsule has had an update in the paid services.

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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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