ATTEMPTS AT ENGINEERING A SHORT SQUEEZE MEET RESISTANCE

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

Resistance To Short Squeeze

Please click here for a chart of Nasdaq 100 ETF (QQQ)

Note the following:

• In the Morning Capsule, we shared with you the factors that would determine the direction of the stock market.  These factors were:
  • Biden
  • Fed speak
  • Short squeeze
• The chart shows strong moves in both directions after CPI was released.
• The momo crowd was encouraged by Biden’s remarks and bought more aggressively, giving the bulls an edge.
• The chart shows when St. Louis Fed President Bullard spoke.  Bullard said that it made sense to rapidly increase interest rates to over 5% because front loading had worked.
• As a reminder, The Arora Report is politically agnostic.  Our sole job is to help investors.  The comments below are not meant to be political analysis but to show the impact on the stock market.
• The chart shows that the stock market reacted negatively to the unexpected news of Attorney General Garland appointing a special counsel to look into classified documents from President Biden’s home and at a Washington office.
• In The Arora Report analysis, Garland did not have much of a choice if he wanted to appear neutral because he previously appointed a special counsel to look into classified documents found at Trump’s residence in Florida.
• The dip was aggressively bought due to a stellar Treasury auction. 
• The chart shows when the results of the Treasury auction were released.  Here are the results:
  • $18B 30-year Treasury bond reopening
  • High yield: 3.585% (When-Issued: 3.609%)
  • Bid-to-cover: 2.45
  • Indirect bid: 74.6%
  • Direct bid: 16.3%
  • To learn how to interpret Treasury auctions, listen to the podcast titled “Treasury Auction Data: Ignore The Most Popular.”
• The chart shows when Richmond Fed President Barkin spoke.  He said that inflation has slowed and the Fed does not need to increase rates as aggressively as it did previously.
• 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 orange, indicating net supply of stocks.  This is where the VUD indicator provides tremendous value.  Without the VUD indicator, the picture looks a bit rosy: headline CPI turned negative, momo gurus have a new narrative to push the stock market to a new high, and the stock market is up.  With the VUD indicator, a key dimension comes into focus.
  • The major reason the VUD is orange is that various attempts to engineer short squeezes have failed so far. 
• What happens next will depend on earnings.  From the Morning Capsule:

The earnings floodgate will open tomorrow with bank earnings.  Banks scheduled to report earnings tomorrow include  BAC, C, JPM, and WFC.

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 buy 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

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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.