To stay ahead of the curve, here’s what you should be aware of today.
Upcoming Opportunity for Major Buying
For a visual representation, please refer to the provided chart of iShares 20 Plus Year Treasury Bond ETF (NASDAQ:TLT).
Here are some key points to note:
– The chart confirms the accuracy of The Arora Report’s call made on August 2.
– It shows a significant drop in TLT.
– The volume of the drop recorded yesterday was unprecedented, which indicates potential capitulation. It’s generally advantageous to buy during a capitulation, but there are other crucial indicators to consider. For more detailed information, listen to the podcast titled “The Ten Secrets Of Epic Capitulation Riches” in Arora Ambassador Club.
– The RSI on the chart reveals that TLT is oversold and starting to rebound. This suggests that if the macro data is favorable, TLT could experience a rapid increase.
– According to The Arora Report’s analysis, the short interest in bonds is currently at an all-time high. If the macro data is positive, TLT could potentially undergo a major short squeeze and surge.
– However, The Arora Report’s analysis emphasizes that these insights are only applicable in the short term. For the long term, The Arora Report holds a negative view of bonds due to high debt levels, deficits, and persistent inflation.
– Weak data from Automatic Data Processing Inc (NASDAQ:ADP) this morning has caused bonds to rise, consequently impacting stocks. ADP is a major private payroll processor that provides a preview of the upcoming jobs report, set to be released on Friday. The latest ADP employment change figures showed 89K, falling short of the 150K consensus.
– Three significant data releases lie ahead, which have the potential to greatly influence TLT and the stock market.
– The ISM Non-Manufacturing Index will be released today at 10am ET, with a consensus of 53.7.
– Initial claims data will be released at 8:30am ET on October 5, with a consensus of 225K. This data holds significant weight in the adaptive ZYX Asset Allocation Model, which encompasses ten categories and adapts to changing market conditions.
– The jobs report will be released at 8:30am ET on October 6. The consensus for non-farm private payrolls is 150K, and the headline consensus is 158K.
If the economic data favors a rise in bonds, the year-end chase market mechanism could kick in. Should this occur, anticipate a substantial rally and a buying opportunity in the stock market. However, there are no guarantees, so it’s crucial to stay updated on the latest data. Understanding market mechanics can provide a significant advantage. For more advanced insights, check out today’s podcast titled “Market Mechanics: Gain An Edge From Year End Chase” in Arora Ambassador Club.
As an actionable step, the sum total of the preceding information lies within the protection band, which strikes a balance between various factors. Scroll down to view the protection band.
Magnificent Seven Money Flows
Positive money flows are observed in the early trade for Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc Class C (NASDAQ:GOOG), Meta Platforms Inc (NASDAQ:META), NVIDIA Corp (NASDAQ:NVDA), and Tesla Inc (NASDAQ:TSLA).
Negative money flows are seen in the early trade for Apple Inc (NASDAQ:AAPL) and Meta Platforms Inc (NASDAQ:META).
Money flows are mixed in SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust Series 1 (NASDAQ:QQQ) in the early trade.
Momo Crowd And Smart Money In Stocks
In the early trade, the momo crowd is purchasing stocks, while smart money remains neutral. Access to locked content is available through a free trial.
Gold
The momo crowd is buying gold in the early trade, while smart money remains neutral.
For long-term insights, refer to the gold and silver ratings.
The most popular gold ETF is SPDR Gold Trust (NYSE:GLD), and the most popular silver ETF is iShares Silver Trust (NYSE:SLV).
Oil
OPEC+ has decided to maintain current production levels.
API crude inventories recorded a draw of 4.210M barrels, surpassing the consensus of 0.092M barrels.
In the early trade, the momo crowd is buying oil, while smart money remains neutral.
For long-term insights, refer to the oil ratings.
The most popular oil ETF is United States Oil ETF (NYSE:USO).
Bitcoin
Bitcoin (CRYPTO: BTC) is experiencing a range-bound trend.
Markets
The very short-term early stock market indicator will depend on market sentiment. This widely-trusted indicator aids long-term investors in staying in tune with the market and assists short-term traders in quick decision-making.
Protection Band And What To Do Now
Looking ahead is crucial for investors, as relying solely on past information is ineffective.
Consider maintaining existing positions with a long-term perspective. Based on individual risk tolerance, allocate a portion to cash, Treasury bills, or short-term tactical trades. Employ short to medium-term hedges to safeguard your assets while participating in potential market gains.
Determining protection bands involves combining cash with hedges. The high band accommodates those with a conservative or older profile, while the low band suits those who are younger or more aggressive. If hedges are not utilized, the cash level should be higher than the mentioned amount but still significantly less than the combined total of cash and hedges.
It’s important to have sufficient cash reserves to seize new opportunities that may arise. When adjusting hedge levels, consider modifying stop quantities for non-ETF stock positions. Allow wider stops for remaining quantities and provide more flexibility for high beta stocks, which tend to move more than the market.
Traditional 60/40 Portfolio
Probability-based risk assessment, adjusted for inflation, does not currently favor a long-term strategic bond allocation with extended durations.
For those adhering to the traditional 60% stocks and 40% bonds allocation, it’s advisable to focus on high-quality bonds and those with a five-year duration or less. Investors seeking a more sophisticated approach may consider using bond ETFs as tactical rather than strategic positions at this time.
The Arora Report’s track record for accurate calls is well-established. The report has successfully predicted the 2008 financial crash, the onset of a significant bull market in 2009, the COVID-induced market decline, the subsequent post-COVID bull market, and the 2022 bear market.
