INFLATION, FED, RECESSION TUNED OUT – AGGRESSIVE BUYING ON STOCK MARKET BOTTOM PREDICTIONS

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

Guru Power

Please click here for a chart of Nasdaq 100 ETF (QQQ).

Note the following:

• Investors need to distinguish between “a” bottom and “the” bottom.  In a bear market, many short term bottoms are formed, followed by strong rallies.  Typically smart money sells the rallies, driving the stock market to lower lows.
• At this time, the six main points to look for in the bottom are:
  • Capitulation
    •  For those interested in next level information, please listen to the podcast titled “The Ten Secrets Of Epic Capitulation.”
    • In The Arora Report analysis, there are no signs of capitulation at this time.
  • Turn in economic data
    • In The Arora Report analysis, there are no signs of a turn in the economic data.
  • Fed policy
    • In The Arora Report analysis, there are no signs that the Fed is losing its spine to fight inflation.  As a matter of fact, yesterday’s CPI data should be ringing the highest level of alarm bells at the Fed.
  • Geopolitics
    • In The Arora Report Analysis, there are preliminary signs of progress in the Ukraine Russia war.
      • 16 ships are set to sail with Ukrainian wheat as part of a breakthrough agreement.  As a full disclosure, ZYX Short has a short position in wheat.  The position is very profitable.
      • Russia has mostly met its objectives in Ukraine and is ready to talk ceasefire, but Ukraine wants to keep fighting as Ukraine does not want to give up the territory.
    • There are no other developments in the US politics or the politics of other major countries to indicate the bottom.
  • Technicals
    • We will elaborate on this in future capsules.
  • Earnings
    • Please see the Morning Capsule.
• The chart shows a significant drop in the market after the release of hot PPI numbers.  Please see the Morning Capsule for details.
• Buying is primarily by the momo crowd.  There is no smart money buying.  There is also no other buying by other groups in the markets.
• The chart shows the drop in the market was aggressively bought.
• With inflation running hottest in 40 years based on the new CPI and PPI data, steepest yield curve inversion since 2000 indicating a recession, and the Fed potentially getting ready to take the unprecedented step in recent history of raising interest rates by 100 basis points later this month, why is the momo crowd so aggressively buying stocks?
• We shared with you in yesterday’s Afternoon Capsule and reiterated it in today’s Morning Capsule due to its high importance.

The reason is that some momo gurus are predicting that today is the stock market bottom, while others are predicting that tomorrow will be the stock market bottom.

• The buying continues to be driven by the bottom calls by momo gurus.  Do not make the classic mistake of dismissing momo gurus’ calls because historically they are wrong most of the time, their analysis is typically shallow, and their jobs are not to look out for your best interest but to persuade you to keep buying stocks.  The reason to not ignore momo gurus is because they move the markets.  Their followers control a huge amount of resources.  In the very short term, the market moves up based on how aggressive the buyers are and not based on the fundamentals or the macro picture.
• The chart shows that the stock market took another leg up on a tweet by a reporter saying that Senator Schumer is telling senators to prepare for a floor vote as early as Tuesday to start moving CHIPS.  This would include $52B for semiconductors. This tweet added fuel to the fire in aggressive buying of semiconductors.  In the Morning Capsule we wrote,

On the positive side, earnings from Taiwan Semiconductor (TSM) were better than the consensus and whisper numbers.  Taiwan Semiconductor is the largest semiconductor manufacturer in the world and manufactures chips for the likes of Apple (AAPL).

Semiconductors are often the leaders, especially at market turning points.  Good earnings from TSM are bringing in buying in semiconductors in the early trade.

• The Arora Report has given several highly profitable signals to buy instruments such as triple leveraged TQQQ when our systems gave signals for a bottom.
• One difference between The Arora Report signals and the signals from momo gurus is that momo gurus’ signals are based only on potential rewards.  In contrast, The Arora Report signals are based on both risks and rewards and given when the probability of risk adjusted returns is high.
• 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 mostly green due to heavy momo crowd buying.

Money Flows

The momo crowd money flows since the Morning Capsule are 🔒 (To see the locked content, please take a 30 day free trial).

Smart money flows since the Morning Capsule are 🔒.

Short squeeze money flows are 🔒.

A Special Note To New Subscribers

Note the smart money behavior.  Smart money tends to sell into strength on strong up days.

New subscribers should consider adopting smart money’s way of investing and trading.

Sentiment

Sentiment is 🔒.

Sentiment is a contrary indicator at extremes.  In plain English, this means that when sentiment becomes extremely positive it is time to sell and when sentiment becomes extremely negative it is time to buy.

Close

There appear to be buy on close orders.

There is merit to watching the pattern of market on close orders as they represent the day’s dominant net cumulative activity by many professionals and funds.

Gold

The momo crowd money flows in gold are 🔒 since the Morning Capsule.

Smart money flows are 🔒 in gold since the Morning Capsule.

Oil

The momo crowd money flows in oil are 🔒 since the Morning Capsule.

Smart money flows in oil are 🔒 since the Morning Capsule.

Buy Zones And Buy Now Ratings

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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.