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

Smart Money Wins The Debate

Please click here for a chart of Amazon (AMZN).

Note the following:

• The Morning Capsule is about the big picture and not about individual stocks.
• Amazon (AMZN) chart is being used to illustrate the point.
• Smart money has been arguing that peak ‘stay-at-home’ behavior is behind us.  You did not need to be smart money or a sophisticated analyst to simply observe that people are going out and spending less time on stay-at-home activities.
• The momo crowd has been a believer that stay-at-home behavior has provided a sustainable advantage to certain companies and this behavior will continue.
• AMZN is the biggest e-commerce company in the United States.  AMZN’s earnings confirm that the peak stay-at-home behavior is behind us. More striking is that Amazon’s highly promoted Prime Day in late June did not produce sales anywhere near expectations.
• The momo crowd was aggressively buying calls on AMZN stock before earnings.  Smart money was trimming AMZN position before the earnings.
• The chart shows a significant drop in AMZN stock after earnings.
• The chart shows a double top in AMZN stock.
• Take a close look at the RSI on the chart.  In this case, RSI correctly predicted the drop in AMZN stock.
• Pinterest (PINS), a popular social site that gained a large number of active users during the pandemic is now losing active users.  Further, the engagement is down.
• The momo crowd was aggressively buying calls on PINS before earnings. Smart money was selling PINS before earnings.  Now PINS is experiencing a bloodbath.
• Momo crowd gurus are proclaiming that dips are buying opportunities and the momo crowd is buying the dip in stocks like AMZN and PINS.

Personal Income And Spending

June Personal Income rose 0.1% vs. -0.6% consensus.  This shows what is anecdotally already known – wages are rising.

Spending binge by American consumers is not slowing down.  June Personal Spending came at 1.0% vs. 0.7% consensus.

Fed’s Favorite Inflation Gage

June PCE Prices came at 0.5% vs. 0.7% consensus.

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

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 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 $1829, silver futures are at $25.64, and oil futures are $73.78.

S&P 500 futures resistance levels are 4400, 4460 and 4600: support levels are 4318, 4200 and 4000.

DJIA futures are down 87 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.

GDP EXCEEDS PANDEMIC HIGH

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

GDP

Please click here for a chart of the U. S. Gross Domestic Product (GDP).

Note the following:

• The chart shows that GDP now exceeds pandemic high.
• In theory, the pandemic should have caused harm. The chart shows that the pandemic has resulted in a bigger economy due to massive borrowing and money printing.
• On the surface, a big economy sounds good. However, the other side of the ledger is the very high national debt and a very high Fed balance sheet – politicians have decided to be blind to these two negatives and the public is oblivious basking in the bliss of knowing only one side of the ledger.
• Q2 GDP-Adv came at 6.5% vs. 8.5% consensus.  This number is weaker.
• Q2 Chain Deflator-Adv came at 6.0% vs. 5.4% consensus.  This indicates that inflation is rising faster than even the higher consensus estimates.
• Initial Jobless Claims came at 400K vs. 375K consensus. This is a leading indicator and carries heavy weight in our models.
• The stock market is reacting slightly positive to the data.
• Good earnings, in general, are resulting in a muted response from the stock market simply because expectations were so high.

Momo Crowd And Smart Money In Stocks

The momo crowd is 🔒 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

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 $1828, silver futures are at $25.56, and oil futures are $72.79.

S&P 500 futures resistance levels are 4460 and 4600: support levels are 4000, 4318, and 4200.

DJIA futures are up 153 points.

 

FED LIKELY TO USE THE DELTA VARIANT AS AN EXCUSE TO PUMP MORE AIR INTO THE STOCK MARKET

July 28, 2021

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

The Excuse

Please click here for a chart of  M3 money supply.

Note the following:

• M3 is a broad measure of the money supply.
• The chart shows an enormous increase in money supply in a very short time.
• The famous Nobel Prize winning economist Milton Friedman said, “Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.”
• The Fed is in denial and continues to print money.
• The FOMC is meeting as of this writing and the policy decision will be announced at 2:00 pm ET. Powell’s press conference will start at 2:30 pm.
• So far the Fed has acknowledged that it has been wrong on the following:
  • The inflation rate.
  • The growth rate.
  • In pounding the table that inflation would be transitory for three to four months.
• Lately, the Fed had been bumbling to find a way to justify continued money printing.
• The spread of the delta variant has made the Feds job easy. The Fed will likely use the delta variant as an excuse to continue to print money and pump more air into the stock market.

Chinese Stocks

Several Chinese stocks are tracing an island bottom. This is a technical buy signal. However, no investor should make decisions based only on technicals.

Momo Crowd And Smart Money In Stocks

The momo crowd is 🔒 stocks in the early trade. Smart money is 🔒.

Gold

The momo crowd🔒 gold in the early trade.  Smart money is🔒.

For longer-term, please see gold and silver ratings.

See also  193% PROFIT ON UBER – ANNOUNCEMENT ON TESLA ROBOTAXIS AHEAD – OPPORTUNITIES FOR INVESTORS

Oil

API showed a draw of 4.728M barrels vs. consensus of a draw of 3.433M 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 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 $1797, silver futures are at $24.77, and oil futures are $72.07.

S&P 500 futures resistance levels are 4400, 4460, and 4600: support levels are 4318, 4200, and 4000.

DJIA futures are up 34 points.

TESLA EARNINGS ILLUSTRATE THE IMPORTANCE OF POSITIONING FOR STOCK MARKET INVESTORS

July 27, 2021

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

Importance Of Positioning

Please click here for a chart of  Tesla (TSLA).

Note the following:

• The Morning Capsule is about the big picture and not about individual stocks.
• The chart of Tesla is being used simply to illustrate the bigger point – investors should understand the importance of positioning.
• The chart shows when TSLA earnings were released.
• TSLA earnings were spectacular – they were ahead of the whisper numbers on most metrics. Stocks move based on the difference between the reported numbers and whisper numbers.  Whisper numbers are the numbers that analysts provide privately to their best clients. Consensus numbers are the estimates that are published and become available to the public.  One of the best-kept secrets is that those with less knowledge are routinely misled by Wall Street and the media in believing that stocks move based on consensus numbers.
• Considering the history of implied volatility around earnings of TSLA stock,  TSLA stock should have moved up $50 to $75 on these great earnings and the VUD indicator should have been solid green. 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 chart shows that there was a very small move of about $17 after the earnings release and then the stock pulled back.
• The chart shows that as of this writing, the VUD indicator is orange.
• Sometimes there is a delayed reaction and it is conceivable that TSLA stock may move up. However, if the stock does not move up strongly, it is a big tell on positioning in TSLA stock.
  • Most investors who are likely to buy TSLA stock already own enough TSLA stock.  This means that even though earnings are great, there are not enough investors left to buy the stock to run it up higher.
  • Short squeezes have often added to the gains after earnings.  In this case, the inference is that short-sellers who were going to buy to cover based on a small rise had already covered before the earnings.
• The main point is that just like TSLA, the overall positioning of investors in the stock market is very high now.  This means that it is harder for the stock market to move higher even on good news.

False Amazon Rumor

The report about Amazon getting ready to accept bitcoin previously caused a massive short squeeze in bitcoin.  The report has turned out to be false. It is common for pumpers to get false reports published even in reputable media. In this case, somebody handsomely profited by engineering a massive short squeeze in bitcoin.

Durable Goods

Durable Goods Ex-transportation came at 0.3% vs. 0.9% consensus.

Headline Durable Goods came at 0.8% vs. 2.1% consensus.

Home Price Index

Case-Shiller Home Price Index came at 17.0% vs. 15.2% consensus.

Fed Meeting

Fed meeting is underway. The Fed will announce results at 2:00 pm ET tomorrow.

Momo Crowd And Smart Money In Stocks

The momo crowd is 🔒 stocks in the early trade.  Smart money is🔒.

Gold

The momo crowd is 🔒 gold in the early trade.  It is the momo crowds’ pattern to buy gold ahead of the Fed decision.  Smart money is 🔒.

For longer-term, please see gold and silver ratings.

Oil

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.

See also  WEEKLY STOCK MARKET DIGEST: WORST WEEK FOR THE STOCK MARKET IN 2024 – WHAT TO DO NOW

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 $1803, silver futures are at $25.17, and oil futures are $71.90.

S&P 500 futures resistance levels are 4460 and 4600: support levels are 4400, 4318 and 4200.

DJIA futures are down 96 points.

LATECOMERS BUYING POPULAR STOCKS, BITCOIN FLIES

July 26, 2021

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

Latecomers

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

Note the following:

• The historical pattern is repeating again – latecomers are buying popular stocks ahead of earnings even though the overall market is coming under pressure in the early trade.
• This week will see important earnings from the likes of AMD, AMZN, AAPL, GOOG, MSFT, and TSLA.
• Whisper numbers keep on going higher by the day.  Whisper numbers are the numbers that analysts share privately with their best clients.
• The chart shows QQQ is holding above micro support.
• The chart shows RSI divergence continues. In plain English, this means that the price has gone higher, internal momentum has gone lower.  If it was not for the upcoming earnings, this RSI divergence would have been a major negative.
• The future direction of the stock market will be mostly determined by the Fed’s policy and the earnings to be released this week.

Bitcoin

Bitcoin is seeing a major rally on a report that Amazon may start using bitcoin by the end of this year.  The report has also caused a vicious short squeeze.

Making For-Profit Education Non-Profit

China has confirmed that it is ordering for-profit education companies to become non-profit companies. This is sending shivers down the spine of foreign investors who have been pouring billions into Chinese for-profit education companies.

Momo Crowd And Smart Money In Stocks

The momo crowd is 🔒 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

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 $1802, silver futures are at $25.30, and oil futures are $71.89.

S&P 500 futures resistance levels are 4400  and 4460: support levels are 4318, 4200, and 4000.

DJIA futures are down 107 points.

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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.