Window Dressing And Rare Good Data From China Bringing In Buyers In The Stock Market

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

Buyers Coming In

Please click here for a chart of Invesco QQQ Trust Series 1 QQQ.

Note the following:

• The chart shows that the last time QQQ bounced from the mini support zone, the high fell short of the low band of the top resistance zone. This is a negative.
• Now, QQQ is back to the top band of the mini support zone.
• RSI on the chart shows QQQ is oversold. Oversold markets tend to bounce and this is exactly what is happening in the early trade.
• Today is the last day for most of the window dressing. This is bringing buyers into the stock market. For more details, please see prior Capsules.
• Yesterday, the selling was due to rising yields. This morning, yields are pulling back slightly. This is lifting the sentiment.
• In a rare piece of good data from China, Chinese industrial profits came at 17.2% year-over-year vs. a drop of 6.7% in the prior month. Stocks in Hong Kong jumped 0.8%.
• China is also injecting liquidity into the market, adding to the positive sentiment.
• The positive sentiment from China is carrying over to the rest of the globe.
• Investors are keeping a close eye on the potential shut down of the U.S. government.
• Durable orders are remaining strong. However, this is a very volatile series in the first place.
  • Durable orders came at 0.2% vs. -0.2% consensus.
  • Durable goods ex-transportation came at 0.4 vs. 0.3% consensus.
• Big semiconductor memory maker Micron Technology Inc MU will report earnings after the market close. The earnings and commentary will have read through for other tech stocks. In full disclosure, there is a Micron position in ZYX Buy in the portfolio that surrounds the Core Model Portfolio.
• As an actionable item, the sum total of the foregoing is in the protection band, which strikes the optimum balance between various crosscurrents. Please scroll down to see the protection band.

Magnificent Seven Money Flows

In the early trade, money flows are positive in Apple Inc AAPL, Amazon.com, Inc. AMZN, Alphabet Inc Class C GOOG, Meta Platforms Inc META, Microsoft Corp MSFT, NVIDIA Corp NVDA, and Tesla Inc TSLA.

In the early trade, money flows are positive in SPDR S&P 500 ETF Trust SPY and Invesco QQQ Trust Series 1 QQQ.

Momo Crowd And Smart Money In Stocks

The momo crowd is buying stocks in the early trade. Smart money is 🔒 in the early trade. To see the locked content, please click here to start a free trial.

Gold

The momo crowd is selling 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 build of 1.586M barrels vs. a consensus of a draw of 1.650M barrels.

The momo crowd is buying 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 light buying.

The fraud related to major crypto platform JPEX is now estimated at over $175M with over 2,300 victims.  This is the largest crypto fraud in Hong Kong.

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.

Protection Band And What To Do Now

It is important for investors to look ahead and not in the rearview mirror.

Consider continuing to hold good, very long term, existing positions. Based on individual risk preference, consider holding 🔒 in cash or Treasury bills 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.

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.

The Arora Report is known for its accurate calls. The Arora Report correctly called the 2008 financial crash, the start of a mega bull market in 2009, the COVID crash, the post-COVID bull market, and the 2022 bear market.  Please click here to sign up for a free forever Generate Wealth Newsletter.