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

PCE

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:

• PCE is the Fed’s favorite gauge of inflation.  The data just released shows good news.  Here are the details:
  • PCE came at 0.6% vs. 0.7% consensus.
  • Core PCE came at 0.3% vs. 0.4% consensus.
• The data would have normally caused a 1000 Dow point rally, but futures are way down for the following reasons.
  • ECB President Christine Lagarde said that the era of low inflation is over.  This is not what momo gurus want.
  • There is heavy selling of stocks in Europe on recession fears.  Selling is spilling into US stock futures.
  • Bitcoin has fallen below $20,000.  Deleveraging in bitcoin is spilling into stock futures.
• The chart shows that the market is now firmly in the support / resistance zone.

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• The chart shows that the market is in the low band of the support / resistance zone.
• President Biden is holding a press conference.  What Biden says may move the market.  Whichever way the market starts moving, the move will be exaggerated with machines jumping in on that side.  Also, how bitcoin trades from here may have a major impact on the stock market in the very short term.

A Strategic Move By Russia

In an unexpected move, Russia has moved out of strategic Snake Island.  Russia says that the move is a goodwill gesture to facilitate export of wheat from Ukraine.  As a full disclosure, ZYX Short has a short position in wheat ETF WEAT.  The position is very profitable.

It is hard to say what Putin’s real intention is, but on the surface, this is a positive development.  Stock market bears need to keep in mind that if hostilities lessen in Ukraine, the stock market can potentially have a very strong rally.

At this time, the media is not highlighting this potentially good news.

China Economy Bottoms

The media is also not highlighting the good news from China.  China’s economy may have bottomed.  The official PMI rose to 50.2 vs. 50.5 consensus.  Even though PMI is less than the consensus, it is good news because any number above 50 indicates economic expansion.

Holiday Schedule

Starting this afternoon, liquidity in the stock market will drop as senior managers head out for the Independence Day holiday.  Trading desks will be manned by junior personnel.  The stock market will be closed on Monday.

Due to Independence Day, the next Capsule will be on July 6.  If the market conditions change requiring a change in our present calls, you will receive a post.

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 🔒 stocks in the early trade after favorable inflation data.

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

As of this writing, the results of the OPEC+ meeting are not clear.

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

For longer-term, please see oil ratings.

Bitcoin

Bitcoin has fallen below the psychological level of $20,000.

SEC has rejected Grayscale’s application for spot bitcoin ETF.  Grayscale has sued the SEC.  The problem Grayscale is facing is that GBTC, a popular vehicle to buy bitcoin, is trading at a significant discount to the net asset value.  Greyscale was planning to convert the bitcoin trust into a bitcoin ETF.  Such a move would have eliminated the discount.

Markets

Our very, very short-term early stock market indicator is 🔒, but expect the market to open 🔒.  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 $1822, silver futures are at $20.53, and oil futures are $109.35.

S&P 500 futures resistance levels are 3860, 3950 and 4000: support levels are 3630, 3600 and 3520.

DJIA futures are down 343 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.

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

US Iran Talks Fail

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:

• US Iran nuclear talks have failed.  There was some hope that more Iranian oil would come online, easing inflationary pressures.
• Fed chair Powell is on a panel at the European Central Bank’s Forum on Central Banking in Sintra, Portugal.  What Powell says may move the markets.
• Q1 GDP – Third Estimate was released this morning.  Here are the details:
  • GDP came at -1.6% vs -1.5% consensus.
  • GDP deflator came at 8.2% vs. 8.1% consensus.
  • GDP is a lagging indicator.  The Arora Report focuses on leading indicators.  However, investors cannot simply ignore lagging indicators because other investors pay attention to them. 
• The chart shows that the market ran above the support / resistance zone but was not able to reach the resistance zone overhead.  As of this writing, the market has retraced back into the support / resistance zone.  Temporarily, this is a negative.
• RSI on the chart shows that RSI is rolling over without reaching an overbought condition.  This is also temporarily a negative.
• Cleveland Fed President Loretta Mester said that she wants to see the Fed rate reach 3% – 3.5% this year and above 4% next year. This is above the Fed’s projection of 3.3%.  Keep in mind that the momo gurus are thinking 2.5%.

Spain

Flash CPI in Spain came at 10.0% year over year.  This is the largest increase since 1984.

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

API reported a draw of 3.799M barrels vs. a consensus of a draw of 110K barrels.  This data is bullish for 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 and threatening to break the psychological support of $20,000.

Markets

Our very, very short-term early stock market indicator is 🔒 as it is not yet known what Powell will say.  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 $1832, silver futures are at $20.97, and oil futures are $113.21.

S&P 500 futures resistance levels are 3860, 3950 and 4000: support levels are 3770, 3630 and 3600.

DJIA futures are up 53 points.

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.
• 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 🔒 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 🔒.  Also, expect the momo crowd to continue buying.  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.

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

Ban On Russian Gold

Please click here for a chart of gold ETF (GLD).

Note the following:

• President Biden has announced that the US will ban Russian gold imports.  We are receiving a large number of questions from The Arora Report members about the impact on gold prices.
• Several other G7 countries are also considering a gold ban.
• Russia exports about $15.5B worth of gold every year.
• In our analysis at The Arora Report, the ban on Russian gold exports will not have much impact on the price of gold for the following reasons:
  • Unlike any other commodity, gold is not consumed.  It is held.  All of the gold ever mined in the world is either being held as jewelry or it is sitting in vaults.
  • China and India are the two largest gold buyers in the world.  Expect both of them to continue to buy Russian gold.
  • This may be an opportunity for India, as India may be able to buy gold at a discount.
  • It is very difficult to determine in which country gold was mined.
• The chart is confirming our analysis.
• The chart shows that gold has been under pressure but has made a higher low.  This is a positive.
• Gold moves inverse to the dollar and interest rates.
• The dollar has been very strong and interest rates have been rapidly rising.  Based on these two developments, gold should be trading about $200 below where it is trading at.
• The fact that the gold continues to trade significantly higher than where it should trade is a positive for gold.  This indicates that gold is under accumulation by investors who are concerned about inflation.
• For the first time since 1918, Russia has defaulted on its foreign debt denominated in dollars.
• Typically a country defaults on debt when it runs out of money.  However, the case with Russia is an exception.  Russia is making more money now than it was prior to the Ukraine war.  It is simply that due to the sanctions and special steps taken by the US government, Russia cannot use the banking system to make the debt payments.
• Investors should consider both developments of a ban on Russian gold and default on Russian debt as symbolic with no major consequences.

Durable Goods 

Durable goods data was released this morning.  Here are the key points:

• Durable Goods Orders came at 0.7% vs. 0.1% consensus.
• Durable Goods Orders Ex-Transportation came at 0.7% vs. 0.4% consensus.
• These are very strong numbers.
• In our analysis at The Arora Report, durable goods numbers are very volatile.  Investors need to look at the trend, not just one months’ numbers.
• The momo crowd was aggressively buying stocks in the early morning.  The momo crowd’s gurus are urging them to buy stocks because they believe that the slowing economy will deter the Fed from fighting inflation.
• At least temporarily, durable goods orders data throws cold water on momo crowd gurus’ argument.
• Significant selling came in the stock market after the release of durable goods data. 
• Expect the momo crowd to be oblivious to the data and buy stocks.

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

There is buying in bitcoin as bitcoin held above $20,000 over the weekend.

Markets

Our very, very short-term early stock market indicator is 🔒 but expect the market to open 🔒.  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 slightly 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 $1831, silver futures are at $21.34, and oil futures are $107.93.

S&P 500 futures resistance levels are 3950, 4000 and 4200: support levels are 3860, 3770 and 3630.

DJIA futures are up 35 points.