By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
Double Bottom?
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:
- Investors have found several reasons coming together today to buy stocks. These include a potential double bottom, RSI, yields pulling back, no new large currency moves, and a statement by Chicago Fed Charles Evans.
- The chart shows a potential double bottom is forming. A double bottom is often a buy signal. Please note the “?” next to the double bottom on the chart. The macro picture is not supporting a stock market bottom here, but that does not mean the momo crowd will not run up the market from here as the momo gurus have latched on and proclaimed that a double bottom is in.
- The chart shows that RSI made a lower low compared to the June 17 low and has now bounced. There are different interpretations, but momo gurus are latching on to the positive interpretations and ignoring the negative interpretations.
- The chart shows that RSI is bouncing after becoming very oversold. From a technical perspective, this is positive in the very short term.
- The chart shows the RSI crossing the moving average shown in red. This is a buy signal in the very short term.
- The chart shows the volume was heavier on Friday; momo gurus are calling it capitulation. In The Arora Report analysis, the volume was not heavy enough to be a typical capitulation. Moreover, for capitulation, you need to look at 10 different factors. Most of those factors are not present. For those wanting next level information, consider listening to the podcast titled “The Ten Secrets Of Epic Capitulation Riches.”
- After an aggressive move up yesterday, yields are pulling back today. This is bringing more buying into the stock market.
- There have been no new currency debacles this morning. This is encouraging market bulls.
- Chicago Fed President Evans said, “I’m hopeful that inflation is going to come down while wage growth can continue at a level so that households can keep up.”
- This is encouraging to investors hoping for a soft landing.
- Hope is great, and we all hope for a soft landing. However, prudent investors need to be mindful of history. As we have shared with you before, since the Fed’s founding in 1913, the Fed has managed a soft landing only 10% of the time.
- There is strong buying in cryptos. This is encouraging the momo crowd to buy speculative stocks.
- All of the above factors are good to know, but it does not change the following simple facts:
- Interest rates are still going to go higher.
- Wall Street’s earnings estimates are still too high.
- For the high interest rates and the inflationary environment, the market valuation is still too high.
- Sentiment is too positive for a stock market bottom. Historically, sentiment becomes very negative at bottoms.
Durable Goods
Durable goods came at -0.2% vs. -0.1% consensus.
Durable goods ex-transportation came at 0.2% vs. 0.3% consensus.
China
For the first time since 1990, the growth in China is likely to fall behind the rest of Asia.
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
There is heavy buying in bitcoin. Bitcoin is now above $20,000.
Markets
Our very, very short-term early stock market indicator is 🔒. 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 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 $1644, silver futures are at $18.73, and oil futures are at $78.11.
S&P 500 futures resistance levels are 3770, 3860 and 3950: support levels are 3630, 3600 and 3520.
DJIA futures are up 271 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 take a free 30-day trial to paid services to gain access to more opportunities, please click here.
Markets can generate substantial wealth for knowledgeable investors. NOW YOU TOO CAN ALSO SPECTACULARLY SUCCEED AT MEETING YOUR GOALS WITH THE HELP OF THE ARORA REPORT. You are receiving less than 2% of the content from our paid services. …TO RECEIVE REMAINING 98% INCLUDING MANY ATTRACTIVE INVESTMENT OPPORTUNITIES, TAKE A FREE
TRIAL TO PAID SERVICES.
Please click here to take advantage of a FREE 30 day trial.
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.
