FED STOPS FORWARD GUIDANCE – MOMO CELEBRATES BY AGGRESSIVELY BUYING STOCKS

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By Nigam Arora & Dr. Natasha Arora

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

Fed Decision Key Points

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

Note the following:

  • The Fed is hiking interest rates by 75 basis points.
  • The chart shows that the momo crowd was aggressively buying stocks going into the Fed decision.
  • The chart shows when the Fed decision was announced.
  • The chart shows when Powell’s press conference began.
  • The chart shows buying becoming extremely aggressive as Powell started speaking.
  • In the Morning Capsule we wrote,

The key question is what will Powell say about the forward guidance.  Smart money will be paying attention to the forward guidance.  As far as the momo crowd is concerned, their gurus have already told them to buy aggressively after the Fed.

  • Here are the key points:
    • The Fed has stopped providing forward guidance.
    • The Fed will make decisions meeting by meeting.
    • The Fed sees a neutral funds rate at 2.25% – 2.5%.  The Fed is already there.
    • The Fed will be looking for compelling evidence that inflation is moving down to slow the pace of increases.
    • The Fed is still shooting for bringing inflation down to 2%.
    • Activity in the housing sector has declined.
    • Business investment activity has declined.
    • The labor stays strong.
    • Recently, indicators have softened.
    • Powell does not think that the US is currently in a recession.
    • There is a narrow path to bringing down inflation without causing a recession.
    • Powell acknowledges that the path has recently narrowed further.
  • The momo crowd is aggressively buying bitcoin, speculative stocks, and technology stocks.
  • 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 was orange going into Powell’s press conference.  After Powell’s press conference, the VUD indicator has turned green, but the magnitude is relatively low. This indicates that buyers are extremely aggressive and willing to buy more and more irrespective of the price. In contrast, sellers are very careful in that they want to sell only at higher and higher prices.   
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GDP

Investors may want to see the GDP data tomorrow and the markets’ reaction before taking any major actions.

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

🔒

Nibbling

🔒

This post was published yesterday in The Arora Report paid services.  Since then the Morning Capsule has had an update in the paid services.

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Nigam Arora

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

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.

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