Stock Market Consensus Of Immaculate Everything To Face New Economic Data And Fed Minutes, New Bitcoin Rumor

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

New Economic Data

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

Note the following:

• The chart shows tech stocks have fallen back into the support zone.
• RSI on the chart shows tech stocks are near oversold.
• The stock market has a consensus now that everything is going to be immaculate – the landing, the Fed, interest rates, earnings, adoption of AI, Russia, China, and the Middle East.
• The stock market is assuming a 90% probability of seven rate cuts.
• The stock market is going to face new economic data today:
  • ISM Manufacturing Index will be released at 10am ET. The consensus is 47.1%.
  • JOLTS report will be released at 10am ET.
• The stock market will also face minutes from the last FOMC meeting at 2pm ET. Powell was dovish in the press conference, flipping 180 degrees. At The Arora Report, we will be reading the Fed minutes to see if the 180 degree flip was unanimous or if there was dissension.
• If the new data and the Fed minutes are supportive of immaculate everything, expect a rip roaring rally and new highs.
• If the data is not supportive of immaculate everything, expect momo gurus to come up with a new narrative to try to run up the stock market.
• Market mechanics are neutral as of this writing in the premarket but can easily swing in either direction after the data and Fed minutes.
• Richmond Fed President Tom Barkin has made two key points this morning:
  • Rate hikes are not off the table.
  • The soft landing is at risk.
• 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.
• There is selling in the early trade but money flows in indexes are positive. See below.

Magnificent Seven Money Flows

In the early trade, money flows are positive in Apple Inc AAPL, Tesla Inc TSLA, and Amazon.com, Inc. AMZN.

In the early trade, money flows are neutral in NVIDIA Corp NVDA and Microsoft Corp MSFT.

In the early trade, money flows are negative in Alphabet Inc Class C GOOG and Meta Platforms Inc META.

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.

The most popular ETF for gold is SPDR Gold Trust GLD. The most popular ETF for silver is iShares Silver Trust SLV. 

Oil

The momo crowd is buying oil in the early trade.  Smart money is 🔒 in the early trade.

For longer-term, please see oil ratings.

The most popular ETF for oil is United States Oil ETF USO.

Bitcoin

Yesterday, we wrote:

There is a rumor that a Bitcoin BTC/USD ETF will be approved as soon as tomorrow. The rumor has driven bitcoin above the key level of $45,000. The SEC has until January 10 to make a decision on bitcoin ETFs.

This morning there is rumor that the SEC may reject spot bitcoin ETF.  Bitcoin fell as low as $40,968. Buyers came in at the low, and bitcoin has since recovered to above $42,000.

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 seven 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.

This article is from an external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy.