When the stock market has a bad day, gurus make dire predictions, such as the stock market plunging 40%. On the other hand, when the stock market has a good day, they make rosy predictions.
Both bullish and bearish gurus always put on a confident face. Do you find these contradictions helpful in an actionable way?
You may be familiar with Arora’s Second Law of Investing: No one knows with certainty what is going to happen next.
There are always cross-currents in the stock market. Let’s explore how to navigate the stock market with the help of a chart.
Chart
Please click here for an annotated chart of S&P 500 SPY. Somewhat different conclusions can be drawn from the charts of the Dow Jones Industrial Average DJIA, Nasdaq 100 ETF QQQ, and small-cap ETF IWM. Please note the following:
• Irrespective of your political ideology, the Mueller report is a win for Trump and for investors.
• The Arora Report monitors leading economic indicators from 23 countries. We have been warning investors since last year that global growth is slowing. Now Wall Street is catching on.
• The yield curve has barely inverted. Contrary to gloom-and-doom projections based on the yield curve, in our analysis at The Arora Report, there are special factors related to central banks that are at play. For this reason, the historical precedents may not apply. Investors should keep a close watch but not panic.
• The chart shows the Arora call that the smart money was selling aggressively into the strength before the market fell. The advantage of monitoring smart money flows is on vivid display here.
• The chart shows the Arora buy signal that was given on Christmas Eve, which turned out to be the low.
• The chart shows a technical breakout.
• The chart shows a potential failure of the breakout on heavy volume and falling RSI (relative strength index). This is a negative pattern. However, the situation needs to be closely monitored as the bear case from a technical perspective will not be fully established unless the market falls through the support zone shown on the chart.
• The chart shows that The Arora Report correctly identified prior lows as “not likely lows.”…Read more at MarketWatch.
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