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Perma Bull Perma Bear Sentiment Indicator Please click here for a chart of Invesco QQQ Trust Series 1 (NASDAQ: QQQ).
Note the following:
- The chart shows that the AI frenzy driven rally continues.
- The chart shows that on the pullback, the trendline held. Technically, this is bullish behavior.
- The chart shows that the stock market is back up against the low band of the resistance zone. The pattern formed is a bullish pattern. The prior outside day pattern is now negated.
- The chart shows that RSI has pulled back, relieving the overbought condition. Technically, this is bullish as this often allows the stock market to go higher.
- Wall Street is full of gurus who are perma bulls. They are always bullish no matter what. Outside of mainstream Wall Street, there are a few prominent perma bears who are always bearish. The crowd is now revering perma bulls and reviling perma bears. Last year, the crowd was revering perma bears and reviling perma bulls.
- Interestingly, a vast majority of perma bull gurus did not recognize early on that there would be an AI rally. Many stayed oblivious to AI until everybody and their cousin knew about it. The result of the AI frenzy driven rally is that perma bulls are benefiting.
- Prudent investors make a point to never follow the perma bulls or the perma bears.
- Smart money uses the crowd’s reaction to perma bulls and perma bears as a sentiment indicator. In general, you want to buy when perma bears are revered and you want to be cautious when perma bulls are revered.
- The crowd’s reaction to perma bears and perma bulls is one of the data points in the proprietary Arora Sentiment Indicator.
- The deluge of earnings continues this week. Most important are earnings from Apple Inc (NASDAQ: AAPL) and Amazon.com, Inc. (NASDAQ: AMZN). Both Apple and Amazon earnings are set to be released on August 3 after market close.
- Among the magnificent seven, the money is flowing in AAPL, NVIDIA Corp (NASDAQ: NVDA), Alphabet Inc Class C (NASDAQ: GOOG), AMZN, and Tesla Inc (NASDAQ: TSLA). It is a rare Monday when money is not flowing in Microsoft Corp (NASDAQ: MSFT) and Meta Platforms Inc (NASDAQ: META).
- The all important jobs report is ahead on Friday.
- As an actionable item, the sum total of the foregoing is in the protection band, which strikes the optimum balance between various crosscurrents.
Bank Of Japan Curveball The Bank of Japan (BoJ) unexpectedly threw a curveball after Friday’s decision to widen the band for yield control. Previously, the high band was 0.5%. BoJ unexpectedly bought JGBs at a yield of 0.6%.
Europe There is important economic data from Europe. Here are the details:
- Eurozone Q2 GDP came at 0.3% quarter-over-quarter vs. 0.2% consensus.
- CPI came at -0.1% month-over-month vs. 0.3% consensus.
- Core CPI came at -0.1% month-over-month vs. -0.5% consensus.
China China’s manufacturing PMI came at 49.3 vs. 49.2 consensus.
Non-manufacturing PMI came at 51.5 vs. 52.9 consensus.
The Chinese government is looking to provide stimulus to increase consumption. As a result, stocks in Hong Kong and Shanghai rose in spite of the weak data.
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 Gold futures have crossed above the psychologically important level of $2,000.
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 It has been revealed that the SEC had instructed Coinbase Global Inc (NASDAQ: COIN) to halt trading on all crypto coins except Bitcoin to United States Dollar (BTC/USD). If Coinbase had followed the SEC order, this would have been the death knell for most cryptos. This is what led to legal action.
Bitcoin is range bound.
Markets Our very, very short-term early stock market indicator is neutral but expect the market to open higher. 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