By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
Pay Attention
Treasury Secretary Bessent will be speaking at 10am ET about “the status of the system.” There are indications that this is not another ordinary speech. There is a high probability that Bessent may signal something big. Historically, when Treasury Secretaries speak about the state of the system, it typically lays the groundwork for something big. Investors may consider becoming familiar with the 1985 Plaza Accord. The 1985 Plaza Accord was an agreement to change the relationship between currencies. As an example of the consequences of the Accord, Japanese yen rose from about 240 to 120 yen per dollar by 1987.
The speech may not be impactful, but it is better to be forewarned.
Walk Back From The Brink
Please click here for a chart of 20+ year bond ETF (TLT).
Note the following:
- The chart shows that TLT was staying below zone 3.
- The chart shows the recent rally in bonds after President Trump paused reciprocal tariffs failed.
- The chart shows that the rally did not even reach the top band of zone 3 before failing. This indicated high stress in the bond market.
- The chart shows that bonds were back in the danger zone ahead of the all important $70B 5 year Treasury auction today.
- In The Arora report analysis, without President Trump walking back from the brink, there was real danger for the auction today to go poorly and push bonds into zone 4 shown on the chart.
- As a member of The Arora Report, you have been ahead of the curve as you knew that the bond market was President Trump’s pain point.
- President Trump walked back from the brink:
- President Trump said he did not intend to fire Fed Chair Powell.
- President Trump said soothing things about China.
- Earlier in the day yesterday, Bessent had laid the groundwork, indicating that the situation with China should de-escalate over time.
- Immediately after President Trump’s comment about not firing Powell, extremely aggressive buying came in the markets.
- Stocks sharply rose in the after hours.
- Bonds rose.
- Oil rose.
- Dollar rose.
- Yen fell.
- Gold fell.
- The reason the yen and gold fell was because after President Trump’s walk back, there is less need for safe havens.
- Earlier in the afternoon, prior to President Trump’s walk back, The Arora Report had given signals to take partial profits on gold ETF (GLD), silver ETF (SLV), gold miner Newmont (NEM). With the benefit of hindsight, these calls now seem prescient, but only time will tell how good these calls were.
- Tesla (TSLA) stock is very popular among retail investors. Moves in TSLA stock impact sentiment. After hours, Tesla reported dismal earnings – the worst in a long time. Aggressive buying came into TSLA stock when CEO Elon Musk said he would be spending less time on DOGE and more time on his businesses. This comment from Musk energized Tesla bulls and added to the positive sentiment in the stock market that had started minutes earlier from President Trump’s statement.
- Adding to the positive sentiment is that India may consider zero tariffs on Harley-Davidson (HOG) bikes. Musk is also thinking of expanding into India.
- There was considerable Fed speak yesterday. Normally, we would have shared with you the important points from the Fed speak in this morning’s Capsule. However, President Trump’s comments have rendered the Fed speak meaningless.
- Investors should pay careful attention to the results of the Treasury auction today.
- The Fed’s Beige Book will be released today at 2pm ET.
- A 20% staff cut at a big company is draconian. Yet, this is exactly what the new CEO at Intel (INTC) is doing. Investors love layoffs. Unfazed by the misery of those who are laid off, investors are cold hearted. Investors believe the bigger the layoff the better. Money is flowing into INTC stock on the news.
- Adding to the positive sentiment are good earnings from Boeing (BA), AT&T (T), GE Vernova (GEV), Boston Scientific (BSX), and SAP (SAP).
- 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 positive in Amazon (AMZN), Nvidia (NVDA), Microsoft (MSFT), Alphabet (GOOG), Meta (META), Apple (AAPL), and TSLA.
In the early trade, money flows are positive 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) stocks in the early trade. Smart money is *** stocks 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
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
API crude inventories came at a draw of 4.565M barrels.
The momo crowd is *** in oil in the early trade. Smart money is *** in the early trade.
For longer-term, please see oil ratings.
Bitcoin
Bitcoin (BTC.USD) is seeing aggressive buying.
Markets
Interest rates are ticking down, and bonds are ticking up.
The dollar is range bound.
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 5453 as of this writing. S&P 500 futures resistance levels are 5500, 5622, and 5748: support levels are 5400, 5256, and 5210.
DJIA futures are up 729 points.
Gold futures are at $3324, silver futures are at $32.87, and oil futures are at $63.23.
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.
To take a free 30-day trial to paid services to gain access to more opportunities, please click here.
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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.
