By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
Yield Curve
Please click here for a chart of the yield curve.
Note the following:
- The chart goes back to 1976.
- The chart shows the difference between the yield on 10-year Treasuries and 2-year Treasuries.
- The gray bars on the chart show recessions.
- The chart shows that when the yield curve inverts it is followed by a recession.
- The stock market is likely to top out six to twelve months before a recession.
- The other economic indicators that The Arora Report follows and shares with you in the Morning Capsules are not showing any signs of recession in 2022 at this time.
- If the yield curve continues to move the way it is moving, it is giving the indication of a potential recession in 2023.
- There is also a fair probability that the yield curve indicator may not work this time due to the Federal Reserve artificially manipulating the market.
- For this reason, it is important to not rely exclusively on one indicator but on the full ZYX Asset Allocation Model.
- The ZYX Asset Allocation Model relies on ten categories of inputs. Please click here to see the ten categories of inputs.
- Conventional models are static. They work for a while, and when market conditions change, they stop working.
- The ZYX Asset Allocation Model is an adaptive model. In plain English this means that the model automatically changes itself with new market conditions. Please click here to see how this adaptiveness is achieved.
- The ZYX Asset Allocation Model has a long, proven track record in both bull and bear markets.
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.
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 data showed a draw of 4.28M barrels vs. a consensus of a build of 25K barrels.
EIA data will be released at 10:30am ET, but oil is likely to move based on the potential decision about European sanctions on Russian oil. Biden is pushing for such sanctions. Germany is against such sanctions.
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 is range bound and moving with speculative stocks.
Markets
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.
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 $1925, silver futures are at $25.05, and oil futures are $112.84.
S&P 500 futures resistance levels are 4600, 4713 and 4770: support levels are 4460, 4400 and 4318.
DJIA futures are down 154 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.
To take a free 30-day trial to paid services to gain access to more opportunities, please click here.
This post was just published on ZYX Buy Change Alert.
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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.
