By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
China Optimism
Please click here for a chart of Xtrackers Hvst CSI 300 China A-Shs ETF (ASHR).
Note the following:
- Give it to the momo gurus – they excel at coming up with a new narrative persuading investors to buy stocks if the old one does not work.
- The latest narrative is to buy stocks on China cutting quarantine time for international travelers. Previously, quarantine time was 14 – 21 days depending on the destination and city of entry. Under the new regime, international travelers will have to quarantine for only seven days.
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- China cutting quarantine is a positive development, but the rest of the world has already moved away from COVID concerns.
- The news does nothing to change tighter monetary policy, inflation, the prospect of a recession, and slowing earnings growth.
- The chart shows that after making a slightly higher low, the trend in Chinese stocks has been strongly up.
- The chart also shows that Chinese stocks are now at the resistance zone.
- The chart shows that RSI is overbought.
- Before you send us an email asking for the best way to capture opportunities in China, read the coverage in ZYX Emerging. China has been continuously covered in ZYX Emerging for 15 years.
- The news from China resulted in stock buying in Asia. The buying carried to Europe and is now carrying to the US in the early trade.
- There is also some buying in US stocks on quarter end rebalancing.
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.
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 range bound.
Markets
Our very, very short-term early stock market indicator is 🔒, but expect the market to open higher. Also, expect the momo crowd to continue 🔒. 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 $1824, silver futures are at $21.22, and oil futures are $111.22.
S&P 500 futures resistance levels are 3950, 4000 and 4200: support levels are 3860, 3770 and 3630.
DJIA futures are up 162 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 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.
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This post was just published on ZYX Buy Change Alert.
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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.