By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know now.
Rally Attempt Fails
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 when the stops of gullible investors were taken out. Please read yesterday’s Afternoon Capsule for details.
- The chart shows that the stock market behaved as it typically does after stops of gullible investors are taken out.
- The chart shows that the rally attempt failed on bad economic data of two PMI’s and New Home Sales.
- New Home Sales came at 511K vs. 580K consensus. The New Home Sales data shows that new home sales are falling much faster than stock market bulls expect.
- IHS Markit Services PMI came at 44.1 vs. 47.3 prior. This data should be especially troubling to stock market bulls. This data also shows that there is a high probability of a recession.
- The current Arora Report call is a 70% probability of a recession in the US and 90% probability of a recession in Europe.
- IHS Markit Manufacturing PMI came at 51.3 vs. 52.2 prior.
- The Treasury auction could have been better. Here are the details:
- $44B 2-year Treasury note auction
- High yield: 3.307% (When-Issued: 3.293%)
- Bid-to-cover: 2.49
- Indirect bid: 59.7%
- Direct bid: 17.3%
- 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 mixed.
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 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.
Orders on close are not showing any direction.
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.
The momo crowd money flows in gold are 🔒 since the Morning Capsule.
Smart money flows are 🔒 in gold since the Morning Capsule.
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
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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