By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
Note the following:
- The chart shows two support zones.
- Ideally, a stock market dip in the lower support zone will likely be a buying opportunity. Of course, it is important to pay attention to individual buy zones of stocks and ETFs. It is also important to pay attention to the Morning and Afternoon Capsules. The stock market is always changing.
- S&P 500 was up 14.4% for the first half of 2021. This is somewhat similar to 2019 and 1998.
- In 2019, S&P 500 was up 18.8% in the first half. It went on to be up 30% for the year.
- In 2019, the market peaked in July, made a low in August and a new high in late October.
- In 1998, S&P 500 was up 18.1% in the first half. It went on to be up 27.5% for the year.
- In 1998, the market peaked in July. It made a bottom in October and a new high in November.
- In 2000 the market crashed. Many popular tech stocks lost 90% of their value.
- Seasonality does not always work but it is important to pay attention to it.
- Investors should differentiate between different time frames.
- In about six trading days, the positive seasonality period will be over.
- The third quarter is traditionally the weakest quarter.
Initial Jobless Claims came at 364K vs. 400K consensus. This is very strong data. Sooner or later the Fed will have to stop its intransigence about money printing and start tapering. This is a leading indicator and carries heavy weight in our models.
The Department of Labor will release the Employment Report at 8:30 am ET tomorrow morning. This report has the potential to move the markets. The consensus is for non-farm payrolls to be 725K and non-farm private payrolls to be 625K.
If these numbers come out significantly lower than expectations, it will reduce pressure on the Fed to taper its money printing. In turn, the stock market will likely go up because money printing is a large part of the air that is fueling the stock market bubble.
In theory, if the number is significantly stronger than expectations, the stock market should go down because it will increase pressure on the Fed to start tapering soon. However, the Momo crowd is likely to ignore any data that is negative from the stock market and buy on any data that allows the Fed to continue money printing at the present rate.
The Office Closed
Our offices will be closed tomorrow (Friday) for the Independence Day holiday. There will be no capsules.
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🔒.
The momo crowd is 🔒 gold in the early trade. Smart money is 🔒.
For longer-term, please see gold and silver ratings.
Oil prices are surging on speculation that OPEC+ may extend the present oil production agreement beyond April 2022.
The momo crowd is 🔒 oil in the early trade. Smart money is 🔒.
For longer-term, please see oil ratings.
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 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.
Gold futures are at $1781, silver futures are at $26.41, and oil futures are $75.68.
S&P 500 futures resistance levels are 4318 and 4400: support levels are 4200, 4000, and 3950.
DJIA futures are up 62 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, on dips, consider holding 🔒 in cash or treasury bills or short-term bond funds 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, 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.
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