Gold Breaks To A New High And Can Go Much Higher, Stocks And Gold Running On 50 BPS Cut

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

Running On 50 bps Rumor

Please click here for an enlarged chart of SPDR Gold Trust GLD.

Note the following:

• The chart shows when gold broke out back in March.
• The chart shows a new breakout in gold.  Gold is hitting an all time high.
• The chart shows that the breakout is on higher volume.  This shows conviction.
• RSI on the chart shows that gold is approaching the overbought level but is not yet there.
• The chart shows the support zone.  How gold reacts if it pulls back into the support zone will be a tell.
• Long time readers of The Arora Report have very large gains in gold.  The Arora Report's track record on gold is unmatched.  The Arora Report gave a signal to back up the truck and buy gold when gold was in the $600 range.  When gold reached $1904 in 2011, The Arora Report gave a signal to sell half of gold holdings and put a stop on the remaining gold at $1757.  Gold topped out on the same day that The Arora Report gave a sell signal and fell to about $1000.  During the fall in gold, readers of The Arora Report made a lot of money by short selling gold.  The Arora Report signals caught the bottom in gold and have since been mostly bullish.
• Due to positioning, gold can go much higher.  Positioning is an important Wall Street mechanic.  Learning about Wall Street's mechanics gives investors several big edges.
• As full disclosure, gold ETF GLD is in The Arora Report’s ZYX Allocation Model Portfolio.  Silver ETF iShares Silver Trust SLV and gold miner Newmont Corporation NEM are in The Arora Report’s ZYX Buy Core Model Portfolio.
• In The Arora Report analysis, the latest breakout in gold is due to a rumor of a 50 bps interest rate cut taking hold.  If the Fed does not cut by 50 basis points, there may be a pullback in gold.  A pullback will be a buying opportunity.  
• The same 50 bps cut rumor drove stocks, especially AI stocks, higher yesterday.  
• Among earnings of note, Adobe Inc ADBE earnings were below whisper numbers as it is taking longer for Adobe's AI products to gain traction compared to expectations in the market.  Also of note are earnings from RH RH, the high end home furnishing company. RH earnings show that the consumer at the high end is resilient and spending.   

Magnificent Seven Money Flows

In the early trade, money flows are positive in Apple Inc AAPL and Alphabet Inc Class C GOOG.

In the early trade, money flows are neutral in Amazon.com, Inc. AMZN and NVIDIA Corp NVDA.

In the early trade, money flows are negative in Microsoft Corp MSFT, Meta Platforms Inc META, and Tesla Inc TSLA.

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

Momo Crowd And Smart Money In Stocks

Investors can gain an edge by knowing money flows in SPY and QQQ.  Investors can get a bigger edge by knowing when smart money is buying stocks, gold, and oil.  The most popular ETF for gold is GLD.  The most popular ETF for silver is SLV.  The most popular ETF for oil is United States Oil ETF USO.

Bitcoin

Bitcoin BTC/USD is range bound.

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 a protection band consisting of cash or Treasury bills or short-term tactical trades as well as short to medium term hedges and short term hedges. 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.

A protection band of 0% would be very bullish and would indicate full investment with 0% in cash.  A protection band of 100% would be very bearish and would indicate a need for aggressive protection with cash and hedges or aggressive short selling.

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 big artificial intelligence rally before anyone else, the new bull market of 2023, the bear market of 2022, new stock market highs right after the virus low in 2020, the virus drop in 2020, the DJIA rally to 30,000 when it was trading at 16,000, the start of a mega bull market in 2009, and the financial crash of 2008. Please click here to sign up for a free forever Generate Wealth Newsletter.