By Nigam Arora
To gain an edge, this is what you need to know today.
Bonds Not Euphoric Like Stock Market
Please click here for a chart of 20+ year Treasury bond ETF (TLT).
Note the following:
- The chart shows that yesterday, bonds did not share the stock market’s euphoria on the Iran deal. Expectations were that bonds would rally on an Iran deal to the low band of zone 3 (resistance). As the chart shows, bonds barely budged. The bond market has considered what the stock market has ignored. Here are the reasons:
- The deal with Iran is not a definitive agreement with details. It is an agreement to negotiate a deal – a memorandum of understanding.
- The thorny issues to negotiate with Iran are still ahead, and there may be setbacks.
- In spite of all the damage to Iran, Iran is now strategically in a stronger position now than before the war started.
- The damage done from the Iran war to the world economy will not disappear overnight.
- Inflationary pressures are not only due to oil but also due to reckless government spending, Fed policies, AI build up, and deglobalization.
- The Kevin Warsh era begins with the FOMC starting its meeting today. The rate decision will be announced tomorrow at 2pm ET.
- The Iran deal will certainly be a relief to FOMC members, but the last Fed minutes show that many FOMC members are not willing to ignore the data and cut rates like President Trump wants. Warsh may attempt to do what President Trump wants, but he cannot cut rates unless a majority of FOMC members agree.
- Overnight, SpaceX (SPCX) perpetual futures that are crypto based experienced a vicious short squeeze. SPCX perpetual futures traded as high as $228.74. At that price, SPCX valuation exceeded that of Amazon (AMZN) and Microsoft (MSFT). While the momo crowd does not care about valuations, prudent investors should consider the following stats:
- SpaceX: revenue of $19B and net income of -$9B
- Amazon: revenue of $743B and net income of $91B
- Microsoft: revenue of $318B and net income of $125B
- Yesterday, Wall Street was buying SPCX stock to frontrun blind money when SPCX will shortly be included in many indexes. Companies that construct indexes have changed their rules to fast-track the inclusion of SPCX stock quickly.
- Blind money is a consistent source of profits for Wall Street. Wall Street consistently frontruns by buying stocks at lower prices and then sells to index funds at higher prices. Index fund managers have no choice but to pay the higher prices, and it is not their own money. It is the money of investors who have drunk the Koolaid that they are not capable of investing in the stock market using their own judgement, and thus, must join blind money. Since blind money does not do any analysis, they often end up paying high prices.
- Here are the dates when SPCX will be fast-tracked into indexes:
- Russell US Index Series on June 26, 2026
- CRSP US Total Market Index on June 26, 2026
- MSCI Global Standard & Large-Cap Indexes on June 29, 2026
- Nasdaq 100 Index, represented by QQQ on July 6, 2026
- In spite of all the efforts, S&P 500 (SPX), represented by ETF SPY, is the exception, sticking to the rules and not fast-tracking SPCX entry.
- Adding to the exuberance in the stock market is a further drop in oil this morning. The further drop in oil this morning is triggered by President Trump’s statement that the Strait of Hormuz will be open on Friday. There are many skeptics, but for the time being, the oil market is believing President Trump. As a disclosure, The Arora Report has given signals to take more partial profits on a short position in oil ETF USO and a long position in inverse oil ETF SCO.
- Yesterday, the euphoria was so extreme that it overcame selling by investors who were selling on the news of the Iran deal. Expect more investors to continue to sell into the euphoria today. If momo buying is not able to overcome the “sell the news” selling, the stock market can turn negative.
- As an actionable item, the sum total of the foregoing is in the Arora Protection Band, which strikes the optimum balance between various crosscurrents. Please scroll down to see the Arora Protection Band. The Arora Protection Band is one of the large number of unique edges that are available to members of The Arora Report.
Japan
Bank of Japan (BOJ) raised its key interest rate by 25 bps to 1.0%. This was inline with The Arora Report expectations. BOJ is open to further hikes. Prudent investors need to keep an eye on Japan due to the carry trade. In the carry trade, funds have borrowed hundreds of billions of dollars in Japan and invested in the U.S., lately in the AI trade.
Housing Starts
Housing starts came at 1.177M vs. 1.44M consensus.
Building permits came at 1.413M vs. 1.41M consensus.
Magnificent Seven Money Flows
Most portfolios are now heavily concentrated in the Mag 7 stocks. For this reason, to get ahead and get an edge, investors need to dig below the surface of the Mag 7 stocks. It is equally important to rise above the noise of daily news on the Mag 7 stocks. The best way to get an edge, dig below the surface, and rise above the noise of the daily news is to pay attention to early money flows in the Mag 7 stocks on a daily basis. When there is significant news in the Mag 7 stocks that rises above the threshold of noise and impacts your entire portfolio, it is covered in the main section above.
In the early trade, money flows are positive in Amazon (AMZN).
In the early trade, money flows are neutral in Alphabet (GOOG).
In the early trade, money flows are negative in Apple (AAPL), Meta (META), Microsoft (MSFT), Nvidia (NVDA), and Tesla (TSLA).
In the early trade, money flows are mixed in S&P 500 ETF (SPY) and Nasdaq 100 ETF (QQQ).
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 *** in the early trade.
Note for new members: Smart money often sells into the strength generated by momo crowd buying and buys into the weakness generated by momo crowd selling. Over a long period of time, investors come out ahead by adopting smart money’s ways. The exception is in a raging bull market – for very short term trades, consider following the momo crowd and not smart money. Smart money is an important indicator but is only one of hundreds of indicators that go into determining the Arora Protection Band and signals. Please click here and here to understand how signals are generated.
Very Very Short-Term Indicator
The Arora Report’s proprietary 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.
Gold
The momo crowd is *** gold in the early trade. This is reflected in gold ETF (GLD), silver ETF (SLV), gold miner ETF (GDX), and silver miner ETF (SIL). Smart money is *** in the early trade.
For longer-term, please see gold and silver ratings.
Oil
The momo crowd is *** oil in the early trade. Smart money is *** in the early trade.
For longer-term, please see oil ratings.
Bitcoin
Bitcoin (BTC.USD) is range bound.
Markets
Interest rates are ticking down, and bonds are ticking up.
The dollar is range bound.
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.
S&P 500 futures are trading at 7623 as of this writing. S&P 500 futures resistance levels are 7700, 7900, and 8000 : support levels are 7318, 7194, and 7032.
DJIA futures are up 102 points.
Gold futures are at $4367, silver futures are at $70.98, and oil futures are at $77.01.
Arora Protection Band And What To Do Now
It is important for investors to look ahead and not in the rearview mirror. The proprietary Arora Protection Band from The Arora Report is very popular. The Arora Protection Band puts all of the data, all of the indicators, all of the news, all of the crosscurrents, all of the models, and all of the analysis in an analytical framework that is easily actionable by investors.
Consider continuing to hold good, very long term, existing positions. Based on individual risk preference, consider holding *** in cash, Treasury bills, short term fixed income, 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.
A protection band of 0% would be very bullish and would indicate full investment with 0% in cash. A protection band of 100% would be very bearish and would indicate a need for aggressive protection with cash and hedges or aggressive short selling.
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.
Traditional 60/40 Portfolio
Probability based risk reward adjusted for inflation does not favor long duration strategic bond allocation at this time.
Those who want to stick to traditional 60% allocation to stocks and 40% to bonds may consider focusing on only high quality bonds and bonds of five year duration or less. Those willing to bring sophistication to their investing may consider using bond ETFs as tactical positions and not strategic positions at this time.
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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.
