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

Short Squeeze – Option Expiration

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:

• The chart shows that the S&P 500 is up 4.4% in the last two days. The NASDAQ is up 6.8% in the last two days.
• The stocks in Hong Kong are up 20.5% in the last two days.
• Such sharp rallies are typical characteristics of bear market rallies not bull market rallies.
• The chart shows that the market is now slightly above the top band of the support/resistance zone.
• The chart shows that the stock market is now approaching the down sloping trend line.
• To maintain a bullish posture, the market will need to do the following:
  • Sustain above the top band of the support/resistance zone.
  • Decisively break above the trend line.
• The big rally yesterday after the hawkish Fed was due to a vicious short squeeze.
  • The reason behind the vicious short squeeze was the upcoming option expiration.
  • We previously shared with you that this Friday over $3 trillion of notional value of options expire.
  • Investors were heavily buying puts ahead of the Fed announcement.
  • Market makers who sold the puts to investors only partially hedged by short selling stocks.
  • After the Fed announcement, markets started dropping rapidly on the Fed being more hawkish than the consensus.
  • As the market dropped, market makers aggressively short sold to increase their hedges as they could see that a likely target was the lower support zone shown on the chart.
  • Investors also bought more puts immediately after the Fed announcement, causing market makers to increase their short selling.
  • The market reversed in disbelief of the Fed and fears of recession. Please see yesterday’s Afternoon Capsule for more details.
  • As the market reversed, market makers were forced to buy to cover their large short positions causing the vicious short squeeze.
• As of this writing, it is not clear as to what the current position of market makers is relative to options that are expiring tomorrow.
• As the day progresses, market maker positioning may become clearer. This will be the main driving factor of the stock market today. Those desiring next level information should listen to the podcast on positioning.

Jobless Claims

Jobless claims came at 214K vs. 224K consensus.

Housing Starts

Housing starts came at 1.769M vs. 1.7M consensus.

Building permits came at 1.859M vs. 1.86M consensus.

Momo Crowd And Smart Money In Stocks

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

Gold

The momo crowd is 🔒 gold in the early trade. 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 is showing no material reaction to the Fed.

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 $1938, silver futures are at $25.53, and oil futures are $101.45.

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

DJIA futures are down 140 points.

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

The End Game

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 middle of the fog of war, The Arora Report postulated that the most likely end game in Ukraine was the following:
  • Ukraine does not join NATO.
  • Russia gets as many additional concessions as possible.
  • Putin gets an off ramp to declare victory.
  • Please listen to the in-depth podcast for details.
• The news is that Russia is proposing a compromise – Ukraine agrees to not join NATO.
• We previously provided you with five scenarios along with probabilities.
  • The highest probability scenario that an off ramp is found now has a probability of 85%.
• The chart shows that the stock market is gapping up well within the support/resistance zone.
• The market would have likely been up 1000 DJIA points on this news if it was not for the nervousness about the Fed decision.
• The Fed will announce its decision at 2pm ET.
• Powell’s press conference is at 2:30pm ET.
• Futures were ripping this morning, but as of this writing, they are pulling back on the rumor that Powell will talk about a 50 basis point rise in the future.
• If the interest rate rise is only 25 basis points and Powell’s comments are dovish, expect a rip roaring rally. On the flip side, if Powell’s comments are hawkish, depending on the level of hawkishness, a stock market drop to the lower support zone shown on the chart will be likely.
• There will be rumors throughout the day prior to the Fed announcement, but the fact is that nobody really knows at this time.

Hong Kong Stocks Surge 9.1% In One Day

Stocks in Hong Kong are surging 9.1% in one day – the biggest one day gain since 2008.

Shanghai composite is up 3.5%.

The trigger for the big move is the financial stability and development committee of the State Council said that it would take actions to boost the economy.

Retail Sales

The U.S. economy is 70% consumer based. Therefore, it is important for investors to pay attention to retail sales.

Retail Sales came at 0.3% vs. 0.4% consensus.

Retail Sales ex Autos came at 0.2% vs. 0.8% consensus.  This is a weak number and raises the specter of stagflation. 

Momo Crowd And Smart Money In Stocks

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

Gold

The momo crowd is 🔒 gold in the early trade. 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 is seeing 🔒 on positive Russia Ukraine news. The test for bitcoin will be how it reacts to the Fed decision.

Markets

Our very, very short-term early stock market indicator is 🔒 but will change quickly based on what the Fed says. 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 $1920, silver futures are at $25.12, and oil futures are $98.43.

S&P 500 futures resistance levels are 4318, 4400 and 4460: support levels are 4200, 4000 and 3950.

DJIA futures are up 298 points.

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

A Perfect Call On Oil

Please click here for a chart of oil futures (CL_F).

Note the following:

• We have previously written that in addition to paying attention to the news regarding the war in Ukraine, investors who want to know what is really happening should pay attention to the real data points in the markets.  We have written that the most important data point is oil.  Those who want to learn more about the real data points and significantly increase their skills and knowledge in the markets should consider listening to the in-depth podcast.
• Compare the chart of oil today with the chart of oil previously published in a recent Morning Capsule.
• The chart shows a perfect Arora call to short sell oil or buy inverse ETF SCO when it was trading at $130, every analyst was giving a buy signal and Wall Street was beginning to project $200 oil.
• The chart shows that the short signal was given at the exact top to the minute.
• Since the short signal, oil fell 27% to as low as $93.54 this morning before bouncing. There has been up to 42% gain on SCO position in a week.
• The message from the oil chart is that some kind of resolution in Ukraine is near. However there are many other data points that investors need to consider.

Death Cross

There is a death cross in S&P 500 for the first time in two years. Expect a lot of publicity and a lot of sell signals from gurus.   The reality is that a majority of the time, a death cross turns out to be a buy signal.  For practical purposes, it is best to ignore a death cross and focus on other signals with better track records.

Reprieve On Inflation

Core PPI came at 0.2% vs. 0.6% consensus.

Headline PPI came at 0.8% vs. 1.0% consensus.

Momo Crowd And Smart Money In Stocks

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

Gold

The momo crowd is 🔒 gold in the early trade.  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

There is nothing remarkable happening in bitcoin.

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 $1921, silver futures are at $24.97, and oil futures are $96.40.

S&P 500 futures resistance levels are 4200, 4318 and 4400: support levels are 4000, 3950 and 3860.

DJIA futures are up 146 points.

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

Shenzhen Lockdown

Please click here for a chart of  S&P 500 futures (ES_F).

Note the following:

• The chart shows a rally on the progress in Ukraine.
• You may recall that we reported the positive development in Ukraine before many were talking about it.
• Russian and Ukrainian officials are now giving a positive assessment of their talks.  For those who want the next-level information, an in-depth podcast titled The End Game in Ukraine is now live.  The podcast walks you through in detail the most important aspects and opportunities for investors.
• The rally shown on the chart would have been much stronger if it was not for scary headlines about Ukraine in the media and the media ignoring the positive developments.
• The chart shows that the rally on Ukraine has been cut short by the Shenzhen lockdown.  For those not familiar with China, Shenzhen is the tech hub of China.  As an example, Foxconn, the company that manufactures iPhones for AAPL is halting operations in Shenzhen.  Shenzhen has a large population of 17.5 million. The lockdown is due to the spread of coronavirus.
• The virus is also spreading in Jilin and 24 million inhabitants have been locked in.
• There is panic selling in Chinese stocks.   The selling has similarities to selling in the U. S. in March 2020.
• 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 mixed as the positive news from Ukraine collides with negative news from China.

Momo Crowd And Smart Money In Stocks

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

Gold

The momo crowd is 🔒 gold in the early trade.  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 🔒 oil in the early trade.

For longer-term, please see oil ratings.

Bitcoin

Bitcoin is moving up on Elon Musk saying that he is not selling his crypto holdings.

Markets

Our very, very short-term early stock market indicator is 🔒 but can quickly become 🔒if the situation in China worsens.  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 10-year Treasury yield has risen to 2.078% as of this writing on fears of stagflation ahead of the Fed decision on Wednesday.

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 $1963, silver futures are at $25.49, and oil futures are at $104.67.

S&P 500 futures resistance levels are 4318, 4400, and 4460: support levels are 4200, 4000, and 3950.

DJIA futures are up 231 points.