By Nigam Arora & Dr. Natasha Arora

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

Momo Genius

Please click here for a chart of  Tesla ().

Note the following:

  • The chart compares  to , and .
  •  is the flagship ETF of Cathie Wood. Wood is an extremely smart, analytical, highly seasoned, and highly disciplined investor. Most importantly, Wood is a very good trader.
  • Wood’s excellent qualities for the most part do not exist in the momo crowd. Yet, Wood is the idol that the momo crowd worships.
  • Wood has legions of followers who buy and sell every day based on what Wood does in her ETF. “My parents are very thankful to me because  showed them a new way of investing and persuaded them to put all of their money into ARKK,” wrote a proud investor who did not even understand that he was part of the momo crowd.
  • The chart shows that for the year  is up 29.82%, Tesla is up 48.84% but ARKK is down 24.85%.
  •  is the largest holding of ARKK and represents 8.25% of the fund. This indicates that other stocks in ARKK are down significantly more than 24.85%.
  • If a highly talented investor such as Cathie Wood is down 24.85% in a year when QQQ is up 29.82%, how have the portfolios of typical momo crowd investors fared? Based on the emails we receive from newer subscribers, many have lost 50 – 75% of their portfolio value and are now eager to learn the ZYX Method.
  • Since the momo crowd is not analytical, for the most part, they still have not changed their ways.
  • Here is the big question for investors, ‘Will the momo crowd continue to be as dominate in the stock market in 2022 as they have been in the prior years?’
  • The answer to the above question lies, in part, in the myth that the momo way is the best way to invest.
  • Momentum is a valid strategy and is one of the 50+ strategies we use. However, the strategy has to be wisely used and diversification between strategies is important.

Jobless Claims

Initial claims came at 198K vs. 190K consensus.

Holiday Schedule

Our offices will be closed tomorrow for the New Years’ holiday.  There will be no capsules.

Momo Crowd And Smart Money In Stocks

The momo crowd is 🔒 (To see the locked content, please take a 30 day free trial) 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 🔒.  In recent years, weakness is often seen in one of the last two days of the year. 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 and bonds are range bound.

The dollar is stronger.

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 $1803, silver futures are at $23.02, and oil futures are at $76.36.

S&P 500 futures resistance levels are 4826 and 4900: support levels are 4770, 4713, and 4600.

 futures are up 46 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, 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, the 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.

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Nigam Arora

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

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.