By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
Gas Over Bond Fire
Please click here for a chart of 20+ year Treasury bond ETF (TLT).
Note the following:
- The chart shows bonds recently fell below the danger zone into zone 4 (support).
- The chart shows there has been a relief rally, bringing bonds back up above zone 4. The relief rally in bonds helped the stock market rally.
- Jamie Dimon, CEO of JPMorgan, is the world’s most respected banker. Dimon has poured gasoline on the fire that is raging in the bond market. Dimon sees a crack in the bond market sometime in the future. Unless there are substantial changes in the U.S. government’s borrowing and spending, Dimon sees a reckoning for the U.S.
- In The Arora Report analysis, Dimon is right, but here is the key for investors – the timing of the reckoning is not predictable. The government has enough power and money printing abilities to stave off any reckoning for years. However, the bond market has the potential to be very powerful and also has the power to deteriorate quickly. For example, the bond market reacted negatively when the House passed President Trump’s “big beautiful bill.” The reason for the bond market’s reaction was that the bill increased the deficit and borrowing. It was the bond market’s reaction that prevented the stock market from going to new highs.
- When the reckoning happens, most investors will likely lose their shirts just like they lost big in 2008 when S&P 500 lost 50%. Fortunately, as a member of The Arora Report, you have the antidote to the reckoning in the form of the Arora Protection Band. By following signals from The Arora Report, you will likely make money from the reckoning. In 2008, when many portfolios lost 70% – 80%, the Arora Protection Band was at 100%. The Arora Report not only helped protect against losses but helped generate over 40% positive return with the judicious use of inverse ETFs. Those who followed ZYX Short made even more. The best protection against the eventual reckoning is following Corporate Bundle 1 and dividing your portfolio into buckets, one for each of the four services that are in the corporate bundle. Please see the section “Accelerating Wealth Generation” in the Trade Management Guidelines to learn how to allocate into four buckets.
- Steel stocks such as CLF, NUE, and STLD are surging this morning after President Trump doubled tariffs on steel and aluminum to 50%. Steel stocks overseas are plunging. These tariffs are likely to prove catastrophic for steel mills in Canada. The steel industry directly employs 23,000 Canadians and is responsible for another 100,000 jobs indirectly.
- Blind money is the money that pours into the stock market on the first two days of a new month without any analysis and irrespective of market conditions. Most of the blind money is invested in the afternoon. Traders know this and they buy stocks in the morning to sell to blind money at a higher price in the afternoon.
- ISM Manufacturing Index will be released at 10am ET and may be market moving. Consensus is 49.0%.
- 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 *** (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 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
Oil is surging on a drone attack by Ukraine on air bases deep inside Russia, including Siberia.
Over the weekend, OPEC+ decided to raise production against objections from Russia.
In The Arora Report analysis, OPEC+ raising production is helping move oil prices higher because U.S. shale producers may produce less if prices go lower. Moreover, the OPEC+ production increase is inline with expectations.
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 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 5898 as of this writing. S&P 500 futures resistance levels are 5926, 6017, and 6131: support levels are 5748, 5622, and 5500.
DJIA futures are down 118 points.
Gold futures are at $3380, silver futures are at $33.84, and oil futures are at $63.59.
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.
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.
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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.
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.
