Here’s what you need to know today to get the edge.
Cooler CPI
Click here for enlarged image SPDR S&P 500 ETF Trust spy This represents the benchmark stock index S&P 500 (SPX).
Note the following:
- This chart shows that a fall in the Consumer Price Index (CPI) is driving the stock market higher.
- The chart shows low trading volume, indicating a lack of conviction. In theory, trading volume should increase significantly today. Arora Report will be closely monitoring trading volume.
- The RSI on the chart indicates that the market is overbought and susceptible to a pullback.
- CPI data was weaker than expected. Details below:
- Headline CPI came in at 0.0%, versus a consensus forecast of 0.1%, the lowest since 2020.
- Core CPI came in at 0.2%, versus the consensus forecast of 0.3%.
- According to analysis by the Arora Report, the probability of a rate cut in September is currently at 55%, while the probability of a cut in December is at 90%.
- The Fed’s interest rate decision will be announced at 2:00 pm ET, followed by Chairman Powell’s press conference at 2:30 pm.
- In the Arora Report, we will be closely watching the dot plot, which shows interest rate forecasts of FOMC members.
- When trading first began, buying of AI-related stocks was particularly active.
- Bringing all of the above together as a viable item is the protection band, which achieves the best balance between the various backflows. Scroll down to see the protection band. The protection band is one of many unique edges available to members of The Arora Report.
China
Inflation in China is also falling at both the producer and consumer levels. Because the United States is a major importer of Chinese goods, lower producer-level inflation in China will also lead to lower inflation in the United States. More on this below.
- China’s Consumer Price Index was up 0.1% m/m (lower than the consensus forecast of 0.0%) and 0.3% y/y (lower than the consensus forecast of 0.4%).
- China’s producer price index was -1.4% year-on-year, beating the consensus forecast of -1.5%.
The seven grandiose flows of money
At the beginning of trading, the flow of funds was positive. Amazon.com, Inc. Amazon, Alphabet Class C Google, Meta Platforms, Inc. Meta, Microsoft MSFT, NVIDIA NVDAand Tesla TSLA.
In the initial trading period, the flow of funds is neutral. Apple AAPL.
At the beginning of trading, the flow of funds was positive. SPDR S&P 500 ETF Trust spy and Invesco QQQ Trust Series 1 Hehehehe.
Momocloud and smart money in stock investment
The Momo faction buys stocks in the early morning trade. Smart money is not active in the early morning trade.
Note to new members: Smart investors often sell in bull markets created by Momo crowd buying and buy in bear markets created by Momo crowd selling. In the long term, investors benefit from adopting the smart investor approach. The exception is a raging bull market. In very short term trades, consider following the Momo crowd instead of the smart investor.
Money
The Momo faction is buying gold in the early morning trade. Smart money is not active in the early morning trade.
For a longer-term perspective, take a look at the valuation of gold and silver.
The most popular gold ETFs are SPDR Gold Trust goldThe most popular silver ETFs are iShares Silver Trust SLV.
oil
A global decline in fossil fuel consumption and a surge in oil production capacity are creating a massive oil surplus, according to the International Energy Agency. Production capacity is expected to exceed demand by 8 million barrels per day by 2030. The data suggests that there will be an oil surplus by the end of the decade.
API crude oil inventories fell by 2.428 million barrels, beating the consensus forecast of a decline of 1.75 million barrels.
The Momo faction is buying oil in the early morning trade. Smart money is not active in the early morning trade.
For the long term, see oil ratings.
The most popular oil ETFs are US Oil ETF US.
Bitcoin
Bitcoin BTC/USD The rise comes in response to a decline in the Consumer Price Index (CPI).
Protective bands and what to do now
It’s important for investors to look to the future, not the past.
Consider continuing to hold existing quality long-term positions. Based on your personal risk appetite, consider a protective band consisting of cash or Treasury bills, short-term tactical trades, and short- to medium-term hedges and short-term hedges. This is a good way to participate in the upside while simultaneously protecting yourself.
By adding cash to your hedge, you can determine your protection band. A high band of protection is better for older/more conservative investors. A low band of protection is better for younger/more aggressive investors. If you don’t hedge, your total cash amount will be more than the amounts shown above, but significantly less than your cash and hedge combined.
A protection band of 0% indicates you are very bullish and fully invested with 0% cash, and a protection band of 100% indicates you are very bearish and need aggressive protection with cash and hedges, or aggressive short selling.
It’s worth remembering that if you don’t have enough cash, you won’t be able to take advantage of new opportunities down the line. When adjusting your hedge levels, consider adjusting the partial stop quantities of your stock positions (non-ETFs). Consider using wider stops for the remaining quantities and also giving room to high beta stocks. High beta stocks are stocks that move more than the market.
Traditional 60/40 Portfolio
At present, inflation-adjusted probability-based risk reward does not favor a long-term strategic fixed income allocation.
Those who want to maintain a traditional allocation of 60% in stocks and 40% in bonds may consider focusing only on high-quality bonds and bonds with maturities of seven years or less.Those who want to incorporate more technology into their investing may consider using bond ETFs as a tactical rather than strategic position at this time.
The Arora Report is known for its accurate predictions. The Arora Report accurately predicted the massive rise of artificial intelligence before anyone else, the new bull market of 2023, the bear market of 2022, the new stock market highs immediately after the 2020 virus lows, the 2020 virus drop, the DJIA trading at 16,000 to 30,000, the start of the mega bull market in 2009, and the financial crisis of 2008. Click here to sign up for a lifetime free subscription to the Generate Wealth newsletter.
This article is an unpaid outside contributor, does not reflect Benzinga reporting, and has not been edited for content or accuracy.
