TECH STOCKS BREAK CRITICAL SUPPORT

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

Arora calls have been spot on.  Support for tech stocks is now broken.  All investors should pay attention to the chart.

Economic data to be released over the next three days will determine the course of the market.

Support Broken

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

Note the following:

• The chart shows the support.
• The chart shows that in the early trade in the premarket the support is broken.
• The chart shows another support is nearby.
• So far,  recent Arora signals to take partial profits and a moratorium on initiating new long term positions have proven spot on.
• These spot-on calls follow the February 11th call to take profits on momo stocks.  Momo stocks peaked one day later and have been decimated since then.
• The chart shows that RSI is now oversold.
• Oversold RSI means that it will not take much for the market to rebound.
• Since the momo crowd keeps on buying, as the mantra is that the dip is a great buying opportunity, all smart money will have to do is stop selling and a rally can take place.
• Seasonally, investors get happy before Memorial Day and start buying.  Memorial Day is on May 31.  The period between now and May 26 is a high-risk period.
• Tomorrow Consumer Price Index  (CPI) will be released at 8:30 am ET.  This number along with the Producer Price Index (PPI) to be released on May 13 and Retail Sales to be released on May 14 have the potential to primarily determine the course of the market over the next couple of weeks. 

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 🔒.

Gold

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

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

Oil

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

For longer-term, please see oil ratings.

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 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 $1827, silver futures are at $27.35, and oil futures are $64.27.

S&P 500 futures resistance levels are 4200, 4318, and 4400: support levels are 4000, 3950, and 3860.

DJIA futures are down 331 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.