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Shelter Is Problematic Please click here for a chart of SPDR S&P 500 ETF Trust (ARCA: SPY) which represents the benchmark stock market index S&P 500 (SPX).
Note the following:
- The chart shows that the stock market pulled back from the mini resistance zone on signs that AI frenzy fever is breaking.
- The chart shows that there is buying in the stock market in the early trade.
- Yesterday the stock market dropped. The initial trigger was earnings from AI super computer maker Super Micro Computer Inc (NASDAQ: SMCI). Investors bitten by the AI bug were aggressively buying SMCI going into earnings. Earnings showed that SMCI was not selling as many AI servers as investors had hoped for. This caused a sell off in the AI favorite stock NVIDIA Corp (NASDAQ: NVDA) in spite of Nvidia introducing new products the day before. Sell off in Nvidia dragged the market down.
- As a full disclosure, a signal was given in ZYX Short by The Arora Report to short sell SMCI near the top. The position was quickly closed out at a nice profit as SMCI stock fell.
- As is their pattern, the momo crowd started buying stock futures yesterday after the close of the regular session. The momo crowd is using hope strategy, and the hope was that CPI would be benign. Buying by the momo crowd in stock futures fed on itself, leading to aggressive buying going into the release of CPI.
- RSI on the chart shows that in the short term the market is close to oversold.
- The mini resistance zone on the chart is a magnet for stocks to run to.
- CPI came mostly in line with expectations. Here are the details of the CPI data:
- Headline CPI came at 0.2% month-over-month vs. 0.2% consensus.
- Headline CPI came at 3.2% year-over-year vs. 3.3% consensus.
- Core CPI came at 0.2% month-over-month vs. 0.2% consensus.
- Core CPI came at 4.7% year-over-year vs. 4.8% consensus.
- Especially noteworthy is that shelter accounted for 90% of the rise in inflation.
- Also noteworthy is that this is the lowest back to back increase in inflation in two years.
- We have been sharing with you the data about producer price deflation in China. Since the U.S. is a big importer of Chinese goods, deflation in China is helping the U.S.
- Weekly initial jobless claims came at 248K vs. 230K consensus. This indicates that labor demand is beginning to decline. Jobless claims is a leading indicator and carries heavy weight in our adaptive ZYX Asset Allocation Model with inputs in ten categories. In plain English, adaptiveness means that the model changes itself with market conditions. Please click here to see how this is achieved. One of the reasons behind The Arora Report’s unrivaled performance in both bull and bear markets is the adaptiveness of the model. Most models on Wall Street are static. They work for a while and then stop working when market conditions change.
- In The Arora Report analysis, the probability of a Fed rate hike in September has now fallen to less than 10%.
- 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.
Magnificent Seven Money Flows Money flows in Nvidia are negative in the early trade.
Money flows are positive in the early trade in Amazon.com, Inc. (NASDAQ: AMZN), Microsoft Corp (NASDAQ: MSFT), Alphabet Inc Class C (NASDAQ: GOOG), Meta Platforms Inc (NASDAQ: META), Tesla Inc (NASDAQ: TSLA), and Apple Inc (NASDAQ: AAPL).
In the early trade, money flows are positive in SPDR S&P 500 ETF Trust and Invesco QQQ Trust Series 1 (NASDAQ: QQQ).
Momo Crowd And Smart Money In Stocks The momo crowd is buying stocks in the early trade. Smart money is inactive in the early trade.
Gold The momo crowd is buying gold in the early trade. Smart money is inactive in the early trade.
For longer-term, please see gold and silver ratings.
Oil The momo crowd is buying oil in the early trade. Smart money is inactive in the early trade.
For longer-term, please see oil ratings.
Bitcoin Bitcoin (CRYPTO: BTC) is range bound.
Markets Our very, very short-term early stock market indicator is positive. 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