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Hotter Producer Inflation 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 moved up above the top band of the top support zone. The move up was driven primarily by market mechanics.
- Bulls are confident that market mechanics will drive the stock market to the mini resistance zone shown on the chart.
- Bulls have data to back up their belief. About two thirds of the market rise this year is due to market mechanics. Market mechanics tend to become extra powerful in November and December. Bulls are also pointing to the historical data that shows that the year end chase is to the upside in a year when the stock market has been up more than 10% going into the last quarter. Of course, prudent investors need to take into account the current conditions that are unique to this year. All investors should strive to develop deep knowledge of market mechanics to gain a big edge. Due to the high value, Wall Street professionals keep the details of market mechanics close to their chest. The best way to learn about market mechanics is to listen to the podcasts in Arora Ambassador Club.
- Producer Price Index came hotter than expected. Here are the details:
- Headline PPI came at 0.5% vs. 0.3% consensus.
- Core PPI came at 0.3% vs. 0.2% consensus.
- Wall Street has been positioned for better than expected PPI and CPI. Today PPI has dashed bulls’ hopes, but they are hanging tough, trusting that market mechanics will drive the stock market higher irrespective of the data.
- CPI will be released tomorrow at 8:30am ET. The latest consensus is 0.3% for both the headline and core.
- San Francisco Fed President Mary Daly commented that the neutral rate may now be at 3%. Stock market bulls are still hoping for a neutral rate of less than 2%.
- The Fed minutes will be released at 2pm ET. There is plenty of Fed speak ahead including Atlanta Fed President Raphael Bostic, Fed Governor Christopher Waller, and Boston Fed President Susan Collin.
- In The Arora Report analysis, the stock market is expecting dovish Fed minutes and dovish Fed speak. Hawkish Fed minutes or any hawkish Fed speak may cause the stock market to move down.
- The consensus in the market is that Israel will crush Hamas in Gaza as long as there is no northern front. The market has also concluded that there will be no northern front. However, prudent investors should stay alert to what is happening in the north. Rockets have been fired by Hezbollah from the north. Hezbollah is closely aligned with Iran.
- Exxon Mobil Corp (NYSE: XOM) buying Pioneer Natural Resources Co (NYSE: PXD) for $58B is generating positive sentiment.
- 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), Alphabet Inc Class C (NASDAQ: GOOG), Meta Platforms Inc (NASDAQ: META), Microsoft Corp (NASDAQ: MSFT), NVIDIA Corp (NASDAQ: NVDA), and Tesla Inc (NASDAQ: TSLA).
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 stock in the early trade. Smart money is