To gain an edge, this is what you need to know today.
Unprecedented In American History
Note the following:
- Wall Street is frontrunning the blind money. Blind money is the money that flows into Wall Street on the first two trading days of the month without any analysis. Most of the buying for the blind money takes place in the afternoon. Wall Street is frontrunning by buying now and will sell at a profit to the blind money in the afternoon.
- The chart shows that QQQ is moving up but resistance is ahead.
- The chart shows that RSI is overbought.
- The test of the market will be later this week after blind money buying is over.
- Momo crowd is celebrating an unprecedented event in American history that has just occurred. President Biden has just become the first $6 trillion man by proposing a blowout $6 trillion budget.
- The budget is $2 trillion more than before the pandemic. This blowout budget is on top of the $1.7 trillion infrastructure package that Biden is trying to get through Congress. Of course, everyone remembers trillions of dollars spent on sending free money, most of it to Americans who did not need it.
- In the post-World War II era, budgets have averaged about 19.4% of GDP.
- Biden proposes to bring the budget to about 25% of GDP in one big swoop.
- The budget may rise to about $8 trillion in the coming years.
- For the stock market, in the short term, it is a positive because Biden will continue to accelerate the reckless amount of money being borrowed and a large part will flow into the stock market.
- Not many want to talk about how the borrowed money will be paid back. Not many want to talk about the Federal government eating up one-fourth of the GDP. Don’t forget the massive state and city budgets.
Inflation In Europe Heats Up
Inflation in the eurozone climbed to 2% in May.
Inflation in Germany climbed to 2.4%.
Nobody is concerned because the central banks have hammered the message that any rise in inflation will be temporary.
Central banks have a history of being wrong.
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 🔒.
The momo crowd is 🔒 gold in the early trade. Smart money is 🔒.
For longer-term, please see gold and silver ratings.
OPEC increased oil production by less than expected in May.
The momo crowd is 🔒 oil on the news in the early trade. The future OPEC increase in production will be decided in the OPEC meeting today. Smart money is 🔒.
For longer-term, please see oil ratings.
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 stronger.
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 $1911, silver futures are at $26.46, and oil futures are $68.46.
S&P 500 futures resistance levels are 4318 and 4400: support levels are 4200, 4000 and 3950.
DJIA futures are up 269 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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