To stay ahead, here’s what you need to know today.
Here are the key points to note:
– TLT experienced a decline yesterday.
– As we mentioned in the Afternoon Capsule, the drop in TLT was due to a disappointing Treasury auction. For more information, refer to yesterday’s Afternoon Capsule.
– Initially, stocks dropped on the poor Treasury auction, but the momentum crowd bought the dip. Then, Powell’s statement about the possibility of raising rates added to the selling pressure.
– The chart shows that TLT is seeing some buying activity this morning, but it still has a way to go before reaching the lower resistance zone.
– Wall Street mechanics are now bringing in buyers for both stocks and bonds.
– Keep an eye out for the release of University of Michigan consumer confidence and inflation expectation data at 10am ET. This data could have an impact on the market.
– The upcoming major data point to watch is the release of CPI on November 14.
– Remember, it’s Friday, and short squeezes tend to occur on Fridays. Early signs suggest a short squeeze is happening.
– Based on all of this information, the recommended action is to stay within the protection band, which strikes a balance across various factors. Scroll down to see the protection band.
Money flows are positive in Apple Inc (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc Class C (NASDAQ:GOOG), Meta Platforms Inc (NASDAQ:META), Microsoft Corp (NASDAQ:MSFT), NVIDIA Corp (NASDAQ:NVDA), and Tesla Inc (NASDAQ:TSLA). However, money flows are mixed in SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust Series 1 (NASDAQ:QQQ).
The momo crowd is actively buying stocks, and smart money is also present. Start a free trial to access locked content.
Gold is being sold by the momo crowd, while smart money is active. For longer-term insights, refer to gold and silver ratings.
The most popular ETF for gold is SPDR Gold Trust (NYSE:GLD), and for silver, it’s iShares Silver Trust (NYSE:SLV).
In the early trade, the momo crowd is buying oil, and smart money is also present. For longer-term perspectives, see oil ratings.
The most popular ETF for oil is United States Oil ETF (NYSE:USO).
Retail investors are rushing to buy bitcoin, anticipating that whales will exploit low liquidity over the weekend to drive bitcoin (CRYPTO: BTC) to $40,000.
In terms of markets, our very short-term early stock market indicator is negative. This indicator has a strong track record and is used by both long-term investors and short-term traders.
Now, let’s discuss protection bands and what you should do.
It’s important to look ahead instead of dwelling on the past.
Consider maintaining good, long-term positions. Decide how much cash or Treasury bills you want to hold based on your risk tolerance. Allocate some cash for short-term tactical trades, and consider applying short to medium-term hedges. This strategy allows you to protect yourself while also participating in potential gains.
You can establish your protection bands by adding cash to hedges. The high band is suitable for older or conservative individuals, while the low band is appropriate for younger or more aggressive investors. If you choose not to hedge, ensure your total cash level is higher than mentioned above, but lower than the combined total of cash and hedges.
Bear in mind that not having sufficient cash means you won’t be able to seize new opportunities. When adjusting hedge levels, consider modifying stop quantities for non-ETF stock positions. Use wider stops and allow more room for high beta stocks, which are more volatile than the market.
Regarding the traditional 60/40 portfolio, the probability-based risk-reward ratio does not currently favor long-term strategic bond allocation.
If you prefer the traditional allocation, focus on high-quality bonds with a duration of seven years or less. For a more sophisticated approach, you can use bond ETFs as tactical positions rather than strategic ones.