By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know now.
An Ugly Outside Day
Please click here for a chart of Nasdaq 100 ETF (QQQ).
Note the following:
- The pattern shown on the chart is an ugly ‘outside day.’
- Historically, in the period before the momo crowd came to be in control of the stock market, this pattern on Friday would have almost certainly resulted in a much bigger selloff on Monday.
- The trading pattern today has similarities to trading on October 16, 1987, which was a Friday.
- On October 19, 1987, the stock market crashed and lost 22% in one day.
- The probability of a similar crash now is low.
- In 1987, Wall Street had sold portfolio insurance to institutional investors.
- Knowing that they were insured, institutional investors first did not sell.
- The insurance did not work and then institutional investors panicked.
- There is no portfolio insurance now.
- Since 1987, the government and exchanges have put in a number of protective measures such as trading halts.
- Many strongly believe that deep within the government is a highly secretive Plunge Protection Team. The apparent purpose of this team is to stop market crashes.
- Back in 1987, the Fed was engaged with its mandate of price stability. Now the Fed is very much engaged in running up the stock market.
- In 1987, 401ks were not widespread.
- In 1987 most politicians were not interested in pursuing policies to run up the stock market.
- It is difficult to predict with certainty how the momo crowd will behave. There is a fair probability that the momo crowd will aggressively buy the dip. However if momo panics, all bets are off.
- The VUD indicator is the most sensitive measure of net supply demand in real-time. The orange represents net supply and the green represents net demand.
- The VUD indicator is solid orange indicating heavy net supply of stocks.
Money Flows
The momo crowd money flows since the Morning Capsule are 🔒 (To see the locked content, please take a 30 day free trial).
Smart money flows since the Morning Capsule are 🔒.
Short squeeze money flows are 🔒.
A Special Note To New Subscribers
Note the smart money behavior. Smart money tends to sell into strength on strong up days.
New subscribers should consider adopting smart money’s way of investing and trading.
Sentiment
Sentiment is 🔒.
Sentiment is a contrary indicator at extremes. In plain English, this means that when sentiment becomes extremely positive it is time to sell and when sentiment becomes extremely negative it is time to buy.
Gold
The momo crowd money flows in gold are 🔒 since the Morning Capsule.
Smart money flows are 🔒 in gold since the Morning Capsule.
Oil
The momo crowd money flows in oil are 🔒 since the Morning Capsule.
Smart money flows in oil are 🔒 since the Morning Capsule.
Buy Zones And Buy Now Ratings
🔒
Nibbling
🔒
Close
The orders on close are indeterminate.
There is merit to watching the pattern of market on close orders as they represent the day’s dominant net cumulative activity by many professionals and funds.
This post was published yesterday in The Arora Report paid services. Since then the Morning Capsule has had an update in the paid services.
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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.
