WEEKLY STOCK MARKET DIGEST: WHAT PRUDENT INVESTORS NEED TO KNOW NOW

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By Nigam Arora & Dr. Natasha Arora

Weekly Digest from The Arora Report is popular among serious investors and money managers because they have found studying insights from the prior week gives them an edge over the coming weeks. Here is the day by day rundown from the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers of The Arora Report

Please scroll down for the section ‘Protection Bands and What To Do Now.’

 

HOPIUM BUYING – INDIA READY TO CUT TARIFFS TO 4%, TRUMP FLOATS CHINA TARIFFS AT 80%, UK NOT A MODEL

May 9, 2025

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

Hopium Buying

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 the stock market is at the top band of resistance zone 2.
  • The chart shows that the stock market is approaching the 200 day moving average.  A legion of investors believe in the myth of the 200 day moving average.  Such investors are waiting patiently for the stock market to go above the 200 day moving average, so they can aggressively buy stocks.
  • RSI on the chart shows that the stock market has pulled back from an extreme overbought level.  Now, the stock market has room to move in either direction.
  • There is aggressive buying in the stock market on trade hopium about India, China, and the U.K.
  • After conflict with Pakistan, India is motivated to clinch a quick trade deal with the U.S.  Here are the key points:
    • If the U.S. were to support India, it would put pressure on Pakistan to deescalate the current conflict.
    • The U.S. needs India to align against China.
    • India is the prime destination for U.S. companies moving supply chains out of China.
    • India has grown to become the world’s fifth largest economy.
    • India is proposing to give preferential treatment to 90% of U.S. goods.
    • India is proposing to cut tariffs to 4% from about 13% now.
    • The U.S. is already India’s largest trading partner.  India currently runs a $45.7B trade surplus with the U.S.
    • One of India’s big motivations is AI.  India wants the U.S. to treat India the same as the U.K., Japan, and Australia.
  • Trade negotiations are ahead with China this weekend.
    • Ahead of trade negotiations, President Trump is floating the idea of cutting China tariffs from 145% to 80%.
    • Unlike India, China sees itself as equal to the U.S. and is likely to be tougher in negotiations.
    • China is unlikely to accept a lopsided deal like the U.K. did.
  • Contrary to the assertions, the fact is that the U.S. deal with the U.K. is not a model for other trade deals.  Here are the key points:
    • In 2024, the U.S. imports from the U.K. were $68.1B, and exports were $79.9B.  This resulted in a trade surplus of $11.8B in the U.S.’s favor.
    • With many other important countries, the U.S. has a trade deficit.
    • The U.K. was overly eager to strike a trade deal due to idiosyncratic issues.  As an example, you will now be able to buy a Rolls-Royce car in the U.S. without tariffs.  Congratulations if you are in the market to buy a Rolls-Royce!  However, only about 1500 Rolls-Royce cars are sold in the U.S. per year.  The U.K. will be allowed to export 100K cars a year to the U.S. without tariffs. As a reference, about 16M cars are sold in the U.S. per year.
    • The U.K. trade deal does not accomplish any of President Trump’s stated goals –  reducing the trade deficit, raising revenues from tariffs, and bringing manufacturing to the U.S.
    • The U.K. trade deal was about President Trump’s eagerness to put a win on the board and create a positive perception.  President Trump succeeded at creating a positive perception.
  • According to White House Economic Advisor Kevin Hassett, 24 trade deals are close to completion.  Of note is that Hassett repeats the incorrect assertion that the U.K. deal will be the model.
  • As an actionable item, the sum total of the foregoing is in the Arora Protection Band, which strikes the optimum balance between various crosscurrents.   Please scroll down to see the Arora Protection Band. The Arora Protection Band is one of the large number of unique edges that are available to members of The Arora Report.

Magnificent Seven Money Flows

In the early trade, money flows are positive in Amazon (AMZN), Nvidia (NVDA), Microsoft (MSFT), Meta (META), Tesla (TSLA), and Apple (AAPL).

In the early trade, money flows are neutral in Alphabet (GOOG).

In the early trade, money flows are positive in S&P 500 ETF (SPY) and Nasdaq 100 ETF (QQQ).

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.

Note for new members: Smart money often sells into the strength generated by momo crowd buying and buys into the weakness generated by momo crowd selling.  Over a long period of time, investors come out ahead by adopting smart money’s ways.  The exception is in a raging bull market – for very short term trades, consider following the momo crowd and not smart money. Smart money is an important indicator but is only one of hundreds of indicators that go into determining the Arora Protection Band and signals.  Please click here and here to understand how signals are generated.

Very Very Short-Term Indicator

The Arora Report’s proprietary 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.

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 (BTC.USD) is above $100K and seeing aggressive buying.  The hopium is that bitcoin whales will take advantage of low liquidity over the weekend and run bitcoin to $108K.

Markets

Interest rates are ticking up, and bonds are ticking down.

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.

S&P 500 futures are trading at 5703 as of this writing.  S&P 500 futures resistance levels are 5748, 5926, and 6017: support levels are 5622, 5500, and 5400.

DJIA futures are up 89 points.

Gold futures are at $3336, silver futures are at $32.73, and oil futures are at $60.94.

Arora Protection Band And What To Do Now

It is important for investors to look ahead and not in the rearview mirror.  The proprietary Arora Protection Band from The Arora Report is very popular.  The Arora Protection Band puts all of the data, all of the indicators, all of the news, all of the crosscurrents, all of the models, and all of the analysis in an analytical framework that is easily actionable by investors.

Consider continuing to hold good, very long term, existing positions. Based on individual risk preference, consider holding *** in cash, Treasury bills, short term fixed income, 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.

A protection band of 0% would be very bullish and would indicate full investment with 0% in cash.  A protection band of 100% would be very bearish and would indicate a need for aggressive protection with cash and hedges or aggressive short selling.

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.

See also  STOCK MARKET IGNORING TARIFF PULL FORWARD BUT PRUDENT INVESTORS SHOULD NOT

Traditional 60/40 Portfolio

Probability based risk reward adjusted for inflation does not favor long duration strategic bond allocation at this time.

Those who want to stick to traditional 60% allocation to stocks and 40% to bonds may consider focusing on only high quality bonds and bonds of five year duration or less.  Those willing to bring sophistication to their investing may consider using bond ETFs as tactical positions and not strategic positions at this time.

 

BUYING IN NVIDIA ON CHIP RESTRICTION REMOVAL AND U.K. TRADE DEAL BUT THE DEVIL IS IN THE DETAILS

May 8, 2025

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

The Devil Is In The Details

Please click here for a chart of Nvidia stock (NVDA).

Note the following:

  • The Morning Capsule is about the big picture, not an individual stock.  The chart of NVDA stock is being used to illustrate the point.
  • The chart shows that NVDA stock moved above the top band of zone 3.  Zone 3 was previously a resistance zone.  Now, it has become a support zone.
  • The trigger behind the move in NVDA stock along with other semiconductor stocks is President Trump’s plan to rescind chip export restrictions from the Biden era.  These restrictions were designed to limit export of advanced chips to prevent China from catching up with the U.S.
  • In the Arora Report analysis, buying is coming into semiconductors mostly from the momo crowd as the momo crowd rejoices in the removal of chip restrictions.  As usual, the momo crowd is not doing any analysis.
  • In The Arora Report analysis, President Trump is not going to go any easier on the export of advanced chips to China than Biden.  President Trump is simply overhauling Biden era restrictions to make them simpler and more effective.  There is a high probability that new restrictions may turn out to be harsher than the old restrictions.  
  • As the momo crowd aggressively buys semiconductors, the momo crowd is also ignoring disappointing revenue projection from Arm Holdings (ARM).  This information from Arm is important because Arm designs are in over 90% of smartphones.  ARM stock is falling about 7% as of this writing in the premarket.
  • Adding to the aggressive buying in the stock market this morning is a trade deal with the U.K.  President Trump will announce the details of the trade deal at 10am ET.
  • In The Arora Report analysis, prudent investors need to keep in mind the following key points:
    • The trade deal with the U.K. was expected to be the easiest.  
    • A trade deal with the E.U. will not be as easy.  The reason is trade between the U.K. and the U.S. has been mostly balanced, even before any trade deal.  
    • President Trump is promising the U.K. deal will be full and comprehensive, but there is speculation that the U.K. trade deal may turn out to be somewhat limited.  
  • The most important trade deal will be with China, and it will be difficult.  As an indication of what is to come, China’s President Xi and Russia’s President Putin met and are promising to fight what they are calling international bullying by the U.S.
  • Pharmaceutical stocks, such as Pfizer (PFE), Merck (MRK), Eli Lilly (LLY), Novo Nordisk (NVO), Bristol-Myers Squibb (BMY), and Gilead (GILD), and Moderna (MRNA), may come under pressure as President Trump plans to significantly cut drug costs.
  • Initial jobless claims came at 228K vs. 238K consensus.  This indicates that for the time being, the jobs picture remains strong.
  • As an actionable item, the sum total of the foregoing is in the Arora Protection Band, which strikes the optimum balance between various crosscurrents.   Please scroll down to see the Arora Protection Band. The Arora Protection Band is one of the large number of unique edges that are available to members of The Arora Report.

India And Pakistan

As India and Pakistan try to de-escalate, they are also attacking each other with drones.  Stocks in India fell by 0.4% but by 7% in Pakistan.  Prudent investors need to keep an eye on the situation.

Bank Of England

The Bank of England (BOE) cut interest rates to 4.25%.  This was inline with expectations.

Magnificent Seven Money Flows

In the early trade, money flows are positive in Amazon (AMZN), Nvidia (NVDA), Microsoft (MSFT), Alphabet (GOOG), Meta (META), Tesla (TSLA), and Apple (AAPL).

In the early trade, money flows are positive in S&P 500 ETF (SPY) and Nasdaq 100 ETF (QQQ).

Momo Crowd And Smart Money In Stocks

The momo crowd is *** stocks in the early trade.  Smart money is *** in the early trade.

Note for new members: Smart money often sells into the strength generated by momo crowd buying and buys into the weakness generated by momo crowd selling.  Over a long period of time, investors come out ahead by adopting smart money’s ways.  The exception is in a raging bull market – for very short term trades, consider following the momo crowd and not smart money. Smart money is an important indicator but is only one of hundreds of indicators that go into determining the Arora Protection Band and signals.  Please click here and here to understand how signals are generated.

Very Very Short-Term Indicator

The Arora Report’s proprietary very, very short-term early stock market indicator ***.  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.

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 jubilation as bitcoin (BTC.USD) approaches $100K.  There is aggressive buying in bitcoin related stocks such as Strategy (MSTR), Coinbase (COIN), Riot Platforms (RIOT), and MARA Holdings (MARA).

Markets

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.

S&P 500 futures are trading at 5695 as of this writing.  S&P 500 futures resistance levels are 5748, 5926, and 6017: support levels are 5622, 5500, and 5400.

DJIA futures are up 212 points.

Gold futures are at $3358, silver futures are at $32.62, and oil futures are at $59.21.

 

INDIAN MISSILES HIT PAKISTAN, BUYING ON U.S. CHINA TALKS, WILL THE FED BOW TO TRUMP?

May 7, 2025

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

Gold As An Early Indicator

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

Note the following:

  • Here are the four major issues the market is facing today:
    • Indian missiles hit Pakistan. This is critical because both countries are heavily armed with nuclear weapons.
    • Formal talks between the U.S. and China are set to begin this weekend.  Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer are scheduled to meet with Chinese Vice Premier He Lifeng in Switzerland.
    • The Fed will announce its rate decision at 2pm ET, followed by Fed Chair Powell’s press conference at 2:30pm ET.
    • China is taking steps to replace the dollar with the yuan as the anchor of Asian currencies.
  • The chart is useful as an early indicator for prudent investors on the four major issues of the day.  The chart reflects the collective wisdom of investors across the globe. In our decades of experience in the markets, the collective wisdom is not always correct.  Nonetheless, it is important to pay attention to it as it provides clues about investor positioning.  Understanding investor positioning gives you a big edge.  For those interested in next level information on positioning, listen to the podcast titled “Market Mechanics: Positioning.”
  • The chart of gold ETF shows that even after Indian missile strikes on Pakistan in retaliation for a terrorist attack in India, gold is not rocketing.  This indicates that the market believes the situation will deescalate.
  • The chart of gold ETF shows that gold is not collapsing, even after the news of formal trade talks between the U.S. and China.  This indicates that the market believes that in spite of positive headlines, the probability of trade talks producing more than what is already discounted in the markets is low.  In The Arora Report analysis, after the rally, the stock market is already discounting a substantial reduction in China tariffs.
  • The chart of gold ETF shows that the Fed is not likely to cut interest rates.  Gold tends to move up ahead of interest rate cuts.  Gold as an early indicator is saying that the Fed is not likely to bow to Trump by cutting interest rates today.
  • Regarding China’s attack on the dollar, the People’s Bank of China bought gold for the sixth month in a row.  The chart of gold ETF shows that this news is not moving gold higher.  This indicates that in the short term, Chinese efforts to attack the dollar are already discounted in the markets.
  • As an actionable item, the sum total of the foregoing is in the Arora Protection Band, which strikes the optimum balance between various crosscurrents.   Please scroll down to see the Arora Protection Band. The Arora Protection Band is one of the large number of unique edges that are available to members of The Arora Report.
See also  HOPIUM BUYING – INDIA READY TO CUT TARIFFS TO 4%, TRUMP FLOATS CHINA TARIFFS AT 80%, UK NOT A MODEL

Magnificent Seven Money Flows

In the early trade, money flows are positive in Amazon (AMZN), Meta (META), Tesla (TSLA), and Apple (AAPL).

In the early trade, money flows are neutral in Alphabet (GOOG), Nvidia (NVDA), and Microsoft (MSFT).

In the early trade, money flows are mixed in S&P 500 ETF (SPY) and Nasdaq 100 ETF (QQQ).

Momo Crowd And Smart Money In Stocks

The momo crowd is *** stocks in the early trade.  Smart money is *** in the early trade.

Note for new members: Smart money often sells into the strength generated by momo crowd buying and buys into the weakness generated by momo crowd selling.  Over a long period of time, investors come out ahead by adopting smart money’s ways.  The exception is in a raging bull market – for very short term trades, consider following the momo crowd and not smart money. Smart money is an important indicator but is only one of hundreds of indicators that go into determining the Arora Protection Band and signals.  Please click here and here to understand how signals are generated.

Very Very Short-Term Indicator

The Arora Report’s proprietary 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.

Gold

The momo crowd is *** in gold in the early trade.  Smart money is *** in the early trade.

For longer-term, please see gold and silver ratings.

Oil

API crude inventories came at a draw of 4.49M barrels vs. a consensus of a draw of 2.5M barrels.

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 (BTC.USD) is seeing buying.

Markets

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.

S&P 500 futures are trading at 5648 as of this writing.  S&P 500 futures resistance levels are 5748, 5926, and 6017: support levels are 5622, 5500, and 5400.

DJIA futures are up 224 points.

Gold futures are at $3395, silver futures are at $33.08, and oil futures are at $59.21.

 

OVERBOUGHT STOCK MARKET REACTS TO UBER BULLISHNESS, IMPORTANT CHINA MOVE, AND SHOCK FROM GERMANY

May 6, 2025

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

Reaction Of Overbought Market

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 the stock market was near the low band of support zone 3.
  • The chart shows Arora buy signals near the April lows.
  • The chart shows the stock market ran up to the top band of resistance zone 2.
  • The chart shows the Arora signal to take partial profits.
  • The chart shows that the stock market has pulled back from the top band of resistance zone 2 as of this writing in the premarket.
  • The chart shows low volume yesterday, which indicates there is not a lot of conviction in the pullback.
  • As a member of The Arora Report, you already knew in advance that a pullback was likely. On Friday, when RSI reached 100, we shared with you:

RSI on the chart indicates that the market is extremely overbought.  Overbought markets tend to pullback.

  • The market became extremely overbought due to the recent uber bullishness. Yesterday, we wrote:

History tells us that the uber bullishness of the last nine days does not always work out well.  For this reason, The Arora Report call is to take more partial profits on tactical positions started near the April lows.

  • The chart shows that even though RSI has pulled back, the stock market is still overbought.
  • Prudent investors should note that Arora charts use optimized RSI settings for the current market.  The traditional settings that most investors use no longer work well.  
  • The trade imbalance came at -$140.5B vs. -$127.5B consensus.  In The Arora Report analysis, the worsening trade imbalance is due to the rush to import ahead of tariffs.
  • Prudent investors should pay attention to what is happening to currencies in Asia. The dollar has been the anchor for Asian currencies.  Until yesterday, the expectation was that the dollar would continue to be the anchor of Asian currencies.  In a surprise move today, China moved to make the yuan the anchor for Asian currencies.  In The Arora Report analysis, if China is successful, this will be the start of a negative long term development for the U.S.  As a practical action item, this is where Corporate Bundle 1 shines as it diversifies across the globe.  Please see the “Accelerating Wealth Generation” section in the Trade Management Guidelines.  
  • In a shock from Germany, Friedrich Merz did not get the first parliamentary vote to become chancellor.  This development is adding to negativity in the stock market this morning as it indicates less stability in Germany.  In post World War history, Merz is the first would-be-chancellor to not win the first parliamentary vote.
  • The FOMC meeting starts today.  The Fed will announce its interest rate decision tomorrow at 2pm ET, followed by a press conference from Fed Chair Powell at 2:30pm ET.
  • As an actionable item, the sum total of the foregoing is in the Arora Protection Band, which strikes the optimum balance between various crosscurrents.   Please scroll down to see the Arora Protection Band. The Arora Protection Band is one of the large number of unique edges that are available to members of The Arora Report.

Magnificent Seven Money Flows

In the early trade, money flows are negative in Amazon (AMZN), Nvidia (NVDA), Microsoft (MSFT), Alphabet (GOOG), Meta (META), Tesla (TSLA), and Apple (AAPL).

In the early trade, money flows are negative in S&P 500 ETF (SPY) and Nasdaq 100 ETF (QQQ).

Momo Crowd And Smart Money In Stocks

The momo crowd is *** stocks in the early trade.  Smart money is *** in the early trade.

Note for new members: Smart money often sells into the strength generated by momo crowd buying and buys into the weakness generated by momo crowd selling.  Over a long period of time, investors come out ahead by adopting smart money’s ways.  The exception is in a raging bull market – for very short term trades, consider following the momo crowd and not smart money. Smart money is an important indicator but is only one of hundreds of indicators that go into determining the Arora Protection Band and signals.  Please click here and here to understand how signals are generated.

Very Very Short-Term Indicator

The Arora Report’s proprietary 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.

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 (BTC.USD) is seeing selling.

Markets

Interest rates and bonds are range bound.

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.

See also  WEEKLY STOCK MARKET DIGEST: WHAT PRUDENT INVESTORS NEED TO KNOW NOW

S&P 500 futures are trading at 5625 as of this writing.  S&P 500 futures resistance levels are 5622, 5748, and 5926 : support levels are 5500, 5400, and 5256.

DJIA futures are down 293 points.

Gold futures are at $3400, silver futures are at $33.26, and oil futures are at $58.68.

 

BOOK MORE PROFITS, BUFFETT’S COMPANY REPORTS WORST EARNINGS DROP SINCE 2020, OPEC+ SURPRISE

May 5, 2025

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

Take More Partial Profits

Consider taking more partial profits on tactical positions that were started near the April lows.  Please see Trade Management Guidelines to learn how to appropriately take partial profits.

Market Environment

Please click here for a chart of Warren Buffett’s company Berkshire Hathaway (BRK.B)

Note the following:

  • The Morning Capsule is about the big picture, not an individual stock.  The chart of BRK.B stock is being used to illustrate the point.
  • The chart shows BRK.B spiked into zone 1 on enthusiast buying leading up to the event this weekend.
  • The chart shows BRK.B stock has pulled back after losses reported this weekend.  BRK.B stock is now back below zone 1.
  • RSI on the chart shows BRK.B stock is no longer overbought in the short term.
  • The chart shows that over a period of time Berkshire has had a strong run.
  • BRK.B reported the worst earnings drop since 2020.   In Q1 2025, operating earnings came at $9.64B vs. $11.22B in Q1 2024.  This is a drop of 14.1%. These earnings equate to $4.47 per Class B share vs. $4.72 – $4.81 consensus and whisper numbers of $4.90 – $5.
    • The earnings decline was driven by a 48.6% drop in insurance profits.
    • Berkshire also reported a $713M foreign exchange loss.
  • Warren Buffett is the most successful investor of our time.  Buffett provided his insights at the so-called Woodstock of Capitalism in Omaha, Nebraska over the weekend.  Here are the key points:
    • Berkshire’s cash stake increased from $334B at the end of 2024 to $348B.
    • Berkshire has not repurchased BRK.B stock for three consecutive quarters.
    • Berkshire has been a net seller of stocks for ten consecutive quarters.
  • In the Arora Report analysis, Berkshire stock may be 15% overvalued based on the sum of the parts.  Conglomerates tend to trade at a 15% – 20% discount compared to the sum of the parts.  As such, in totality, Berkshire stock may be as much as 30% – 35% overvalued.  It is no wonder Buffett has not been buying any of his own stock.  For those wanting next level information, listen to the podcast series in Arora Ambassador Club that analyzed Warren Buffett’s portfolio in the context of a stagflation scenario.
  • Prudent investors should pay attention to the significant overvaluation in Berkshire stock.  This tells us that the environment is not ripe for starting large strategic positions with the exception of special situations.  At this time, it is best to focus on tactical positions until the overvaluation in the entire market corrects.  
  • S&P 500 just finished a nine day continuous run.  This is a three-sigma event or about 1 in 370.  This bull run has excited stock market bulls.  However, prudent investors need to know that about 80% of the time, such a run has happened in near recessionary environments.  Most important is that such a run happened before the 1987 stock market crash in which the stock market fell about 20% in one day.  
  • History tells us that the uber bullishness of the last nine days does not always work out well.  For this reason, The Arora Report call is to take more partial profits on tactical positions started near the April lows.
  • There is a report that the framework of multiple trade deals will be announced in the coming weeks and as early as this week.  The details are expected to be related to deals with India, Japan, and South Korea.
  • ISM Services data will be released at 10am ET and may be market moving.
  • The FOMC meeting starts tomorrow.  The Fed will announce its rate decision on Wednesday at 2pm ET, followed by a press conference from Powell.
  • As an actionable item, the sum total of the foregoing is in the Arora Protection Band, which strikes the optimum balance between various crosscurrents.   Please scroll down to see the Arora Protection Band. The Arora Protection Band is one of the large number of unique edges that are available to members of The Arora Report.

Australia

Australia’s Labor Party is projected to win the election, returning Prime Minister Anthony Albanese to office.  Australia appears to be following Canada in a shift to the left in response to President Trump.

Magnificent Seven Money Flows

In the early trade, money flows are negative in Amazon (AMZN), Nvidia (NVDA), Microsoft (MSFT), Alphabet (GOOG), Meta (META), Tesla (TSLA), and Apple (AAPL).

In the early trade, money flows are negative in S&P 500 ETF (SPY) and Nasdaq 100 ETF (QQQ).

Momo Crowd And Smart Money In Stocks

The momo crowd is *** stocks in the early trade.  Smart money is *** in the early trade.

Note for new members: Smart money often sells into the strength generated by momo crowd buying and buys into the weakness generated by momo crowd selling.  Over a long period of time, investors come out ahead by adopting smart money’s ways.  The exception is in a raging bull market – for very short term trades, consider following the momo crowd and not smart money. Smart money is an important indicator but is only one of hundreds of indicators that go into determining the Arora Protection Band and signals.  Please click here and here to understand how signals are generated.

Very Very Short-Term Indicator

The Arora Report’s proprietary 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.

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

Over the weekend in a surprise, OPEC+ announced an output increase that was larger than expected for June.  Output from Saudi Arabia and Russia will be nearly tripling the originally planned volume.   

The momo crowd is *** in oil in the early trade.  Smart money is *** in the early trade.

For longer-term, please see oil ratings.

Bitcoin

Bitcoin (BTC.USD) is seeing selling on disappointment that bitcoin whales did not take advantage of low liquidity over the weekend to run bitcoin to $100K.

Markets

Interest rates and bonds are range bound.

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.

S&P 500 futures are trading at 5668 as of this writing.  S&P 500 futures resistance levels are 5748, 5926, and 6017: support levels are 5622, 5500, and 5400.

DJIA futures are down 223 points.

Gold futures are at $3327, silver futures are at $32.76, and oil futures are at $57.39.

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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.

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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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