Benzinga - To gain an edge, this is what you need to know today.
Volatility Ahead 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 government shutdown is averted for now. The can has been kicked down the road until November 17.
- Sunday evening, when futures opened, the momo crowd bought aggressively on the government not shutting down. However, as of this writing, futures have not only given up their gains but have turned negative.
- The chart shows the stock market is in the top support zone. In The Arora Report analysis, the stock market is waiting for a trigger to move out of the top support zone.
- In The Arora Report analysis, October is likely to test the enthusiasm for AI stocks.
- October is historically the most volatile month of the year. Stock market crashes tend to happen in October. Often, October lays the groundwork for the market mechanic for year end chase to drive the stock market higher in November and December. However, keep in mind that in some years like 2022, the chase is to the downside. When investors develop in-depth knowledge of market mechanics, it gives them an edge. About two thirds of the market rise this year has been due to market mechanics. For those wanting next-level information, a podcast titled “Market Mechanics: Gain An Edge From Year End Chase” is in post-production. The podcast will be available in Arora Ambassador Club.
- The year end chase being to the upside or to the downside this year will largely depend on the following:
- Upcoming earnings
- Momentum in AI stocks
- New economic data
- Interest rates
- November FOMC meeting
- RSI on the chart shows that the stock market remains oversold. Oversold markets tend to bounce.
- ISM Manufacturing Index is to be released at 10am ET. The consensus is 47.8%. If the actual number released is far from the consensus, it will move the stock market.
- Jamie Dimon, CEO of JPMorgan Chase & Co (NYSE: JPM), is speaking at 10am ET. In The Arora Report analysis, Dimon’s speech is important. As the head of the largest U.S. bank, he has great visibility into the state of the economy. Dimon recently warned about higher interest rates and lower bonds. His warning was in line with one of The Arora Report scenarios but not in line with the consensus in the stock market. Prudent investors should carefully watch to see what he says about interest rates.
- Fed speak is ahead and maybe market moving:
- Powell and Harker are participating in a roundtable at 11am ET.
- Mester is speaking at 7:30pm ET.
- Today is the beginning of the fourth quarter. Blind money flows into Wall Street on the first two days of the quarter without any analysis and irrespective of market conditions. Most of blind money is invested in the afternoon.
- Wall Street front runs the blind money by buying certain stocks in the morning and then selling them to blind money in the afternoon at a profit. Of course, blind money is oblivious because they do not care what price they pay.
- 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 In the early trade, money flows are positive in Apple Inc (NASDAQ: AAPL), Amazon.com, Inc. (NASDAQ: AMZN), Meta Platforms Inc (NASDAQ: META), Microsoft Corp (NASDAQ: MSFT), and NVIDIA Corp (NASDAQ: NVDA).
In the early trade, money flows are negative in Tesla Inc (NASDAQ: TSLA) and Alphabet Inc Class C (NASDAQ: GOOG).
In the early trade, money flows are mixed 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