By Nigam Arora
To gain an edge, this is what you need to know today.
Front Running
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 in spite of the best efforts of momo gurus and extremely aggressive momo crowd buying, the stock market failed to reach the magnet in 2025.
- The chart shows that so far the Santa Claus rally has not materialized the way bulls expected. This is a negative.
- Expect momo gurus to try very hard to push the stock market to the magnet.
- This morning, Wall Street is front running blind money. Wall Street expects to sell stocks at higher prices to blind money this afternoon or Monday. Blind money is the money that flows into the stock market on the first two days of the month without any analysis or regard for market conditions. Blind money flows are especially strong on the first two trading days of January.
- On the negative side, many investors have been holding off selling stocks to avoid paying capital gains taxes for 2025. Now that the calendar has turned, expect many investors to sell stocks to book gains. Prudent investors know that unrealized gains can quickly disappear. One of the tenants of the ZYX Change Method is to always be in the mode of realizing some profits.
- Beyond the short term crosscurrents, prudent investors need to be mindful that every single major Wall Street bank is very bullish on the stock market for 2026. The best way to understand the implication is to think of a boat where everyone is crowded on one side, hanging over the edge. Everything goes smooth, but if there is a storm, the boat can easily capsize because of uneven weight distribution.
- When it is all said and done, the new year targets put out by Wall Street analysts end up doing investors more harm than good. Those interested in deeply understanding, listen to the podcast titled “THE CLASSIC MISTAKE OF THE NEW YEAR PROJECTIONS TRAP.”
- Corporate insiders took advantage of the strong market in 2025 and unloaded billions of dollars of shares.
- The momo crowd was more powerful than ever before in 2025. Expect the momo crowd to be extremely aggressive in the stock market in 2026.
- As usual, expect smart money to be data dependent in 2026. Also expect smart money to have significant protective measures in place.
- Looking ahead, January 9 and 13 will be very important days. January 9 will see the first jobs report not impacted by the government shutdown. January 13 will see Consumer Price Index (CPI) data.
- Earnings season is ahead and will be the major determinant of the stock market direction. Earning estimates are very bullish.
- As investors look forward, investors need to be mindful that the stock market is primed for perfection. Prudent investors should position themselves to take advantage if perfection truly occurs but also be mindful that there is no cushion if earnings or interest rates are worse than the perfect scenario. There is no room for error or adverse events.
- The U.S. dollar experienced the worst year since 2017. This drove the dollar debasement trade, making gold have the best year since 1979. Going forward, prudent investors should be very concerned about U.S. government policies and attempts by China that are leading to dollar debasement. In the short term, dollar debasement is positive for the stock market, but it is a negative for the stock market in the long term.
- 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.
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), Nvidia (NVDA), Microsoft (MSFT), Alphabet (GOOG), Meta (META), Tesla (TSLA), and Apple (AAPL).
In the early trade, money flows are positive in S&P 500 ETF (SPY) and Nasdaq 100 ETF (QQQ).
Momo Crowd And Smart Money In Stocks
The momo crowd is aggressively buying stocks in the early trade. Smart money is inactive 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 positive 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 And Silver
CME again raised margin on silver. This is a negative for silver. On the positive side, starting today, China is restricting exports of refined silver. Momo gurus’ predictions of silver going to $100 in 2025 did not come true. Keep in mind that a vast majority of momo gurus only jumped in on the silver bandwagon over the last month or two and do not have a long history of accurate silver and gold analysis.
Momo crowd *** (To see the locked content, please take a 30 day free trial) in silver in the early trade is very aggressive.
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
OPEC+ is likely to maintain its present output at its meeting this weekend. This is putting pressure on the price of oil this morning.
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 seeing buying.
Markets
Interest rates and bonds are range bound.
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 6927 as of this writing. S&P 500 futures resistance levels are 7000 and 7200 : support levels are 6780, 6500, and 6256.
DJIA futures are up 157 points.
Gold futures are at $4377, silver futures are at $73.46, and oil futures are at $56.86.
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.
To take a free 30-day trial to paid services to gain access to more opportunities, please click here.
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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.
