CPI AND PPI RALLY TEMPORARILY LOSING STEAM ON NET SUPPLY OF STOCKS

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By Nigam Arora & Dr. Natasha Arora

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

Net Supply Of Stocks

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

Note the following:

  • In the Morning Capsule we wrote,

The chart shows that RSI is overbought and beginning to roll over.  This indicates that the rally is overdone.

  • The chart shows the follow through rally from yesterday into the pre market.
  • The chart shows the PPI release added more fuel to the rally.  Please read the Morning Capsule for details of PPI.
  • 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 orange during the regular session, indicating net supply of stocks.
  • The chart shows when this morning’s rally started running out of steam as some investors took advantage of the overbought market to sell to the momo crowd.
  • The chart shows when the Treasury auction results were released.  The Treasury auction results added more downward pressure.  Here are the details of the results:
    • $21B 30-year Treasury bond auction
    • High yield: 3.106% (When-Issued: 3.095%)
    • Bid-to-cover: 2.31
    • Indirect bid: 70.6%
    • Direct bid: 18.5%
  • The momo crowd has been aggressively buying speculative stocks where valuations are very high relative to the fundamentals.  Many such stocks experienced vicious short squeezes this morning.  Smart money took advantage of the short squeezes and sold into the strength driving prices lower.  Examples include DNA, NVTA, BYND, RBLX, COIN, and BMBL.  As a full disclosure, ZYX Short took new positions in RBLX and BMBL.  These positions are now nicely profitable.
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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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