By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
Great Buying Opportunity Ahead
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 has barely broken below the low band of support zone 1. If the stock market continues lower, support zone 1 will become a resistance zone.
- The chart shows a positive RSI divergence. This indicates the internal momentum of the stock market is not as negative as the price indicates. This is a positive.
- On April 1, we shared with you:
-
In The Arora Report analysis, how the market behaves after Trump’s reveal will come down to the difference between expectations about tariffs that are built into the market and what Trump reveals.
-
If the tariffs Trump reveals are less onerous than market expectations, the stock market will go up.
-
If the tariffs Trump reveals are more onerous than market expectations, the stock market will go down.
-
- The tariffs President Trump imposed are worse than market expectations.
- In The Arora Report analysis, the tariffs President Trump imposed may raise about $700B. Market expectations were for $200B – $300B.
- In The Arora Report analysis, these tariffs, if sustained, will provide a great buying opportunity in the long term, but first, investors must cross the stagflation chasm.
- Investors should think in terms of four separate buckets:
- Long term strategic positions
- Tactical positions
- Hedges
- Short term trades
- It is not appropriate to start any strategic positions at this time from the long side. Tentatively, if the stock market reaches support zone 2 shown on the chart, that may be a time to start thinking about strategic positions. The ideal time to start strategic positions will be if the stock market goes into support zone 3 shown on the chart.
- Will the stock market go to support zones 2 and 3? This will depend on President Trump and the Fed. Here are the two key questions:
- Now that President Trump has taken the big step of imposing tariffs, will he have the nerve to sustain them?
- Will the Fed have the spine to do the right thing by not significantly lowering interest rates.
- In The Arora Report analysis, in the longer term, if these tariffs are sustained and other countries retaliate, stagflation will likely take hold and the stock market will go lower. If capitulation occurs, from a longer term perspective, that will be a buying opportunity for strategic positions. For those who want more information on capitulation, there is a podcast titled “THE TEN SECRETS OF EPIC CAPITULATION RICHES” in Arora Ambassador Club.
- The Arora Report portfolios are well situated based on 360 degree analysis using the adaptive ZYX Asset Allocation Model with inputs in ten categories. Many individual positions are hedged. Here is a great example of how members of The Arora Report are already ahead of the curve.
- The latest increase in hedges on Apple (AAPL) were on February 5 and March 4. On March 4, we wrote:
In Trump’s first administration, Apple was able to get a carve out for China tariffs. As of this writing, it appears that there is no carve out for Apple at this time.
-
- Apple has been trying to diversify its manufacturing outside China in India and Vietnam. This has not turned out for Apple as it had imagined – tariffs are 54% on China, 46% on VIetnam, and 26% on India. In The Arora Report analysis, the impact of tariffs on Apple will be over $30B. If Apple decides to raise prices by about $10B and takes a $20B hit, Apple earnings will be cut by about 15%.
- At the high end, the protection band protects up to 50% of long term portfolios. As of today, the protection band is not being raised for five reasons:
- It is not known how the Fed will react. If the Fed decides to make an emergency rate cut, the stock market may rally. In The Arora Report analysis, such a move on the Fed’s part would be very unwise and add to stagflationary pressures, instead of relieving them. If the Fed cuts rates and there is a rally, the tentative plan is to use the rally to add to the protection band.
- Prudent investors should pay attention to Treasury Secretary Bessent’s statement that the tariffs are the “high water mark” unless other countries retaliate. Bessent is taking a “wait and see” approach. In The Arora Report analysis, investors should ignore the rhetoric coming out of other countries and instead look at the meat of what other countries do. For example, to date, China has had very strong rhetoric, but the meat of China’s response has been very weak. Protection band changes will depend on the response from other countries.
- Momo gurus are urging their followers to buy the dip. If the momo crowd buys and smart money does not sell, there is potential for a bounce. The potential for a bounce cannot be ignored.
- President Trump’s tax cuts, large cost reduction, and deregulation are ahead. All three of these will be positive and may cause sharp rallies.
- Positive RSI divergence shown on the chart.
- Initial jobless claims came at 219K vs. 224K consensus. Today, this data is being overshadowed by tariffs.
- ISM Services Index will be released at 10am ET and may be market moving.
- The jobs report, known as the mother of all numbers, will be released tomorrow at 8:30am ET.
- As an actionable item, the sum total of the foregoing is in the protection band, which strikes the optimum balance between various crosscurrents. Please scroll down to see the protection band. The 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 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 *** (To see the locked content, please take a 30 day free trial) in 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 protection band and signals. Please click here and here to understand how signals are generated.
Very Very Short-Term Indicator
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.
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 range bound.
Markets
Interest rates are ticking down, and bonds are ticking up.
The dollar is taking a major hit.
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 5491 as of this writing. S&P 500 futures resistance levels are 5622, 5748, and 5926: support levels are 5400, 5256, and 5210.
DJIA futures are down 1221 points.
Gold futures are at $3094, silver futures are at $32.15, and oil futures are at $66.77.
Protection Band And What To Do Now
It is important for investors to look ahead and not in the rearview mirror. The proprietary protection band from The Arora Report is very popular. The 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.
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.
To take a free 30-day trial to paid services to gain access to more opportunities, please click here.
This post was just published on ZYX Buy Change Alert.
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.
