Benzinga - by The Arora Report, Benzinga Contributor.
To gain an edge, this is what you need to know today.
Major Buying Opportunity Ahead Please click here for a chart of iShares 20 Plus Year Treasury Bond ETF (NASDAQ: TLT).
Note the following:
- The chart shows that The Arora Report call that was made on August 2 was very timely and spot on.
- The chart shows the dramatic drop in TLT.
- The chart shows that the volume on the drop yesterday was a record. In The Arora Report analysis, this is one indication of potential capitulation. In general, it pays to buy when a capitulation occurs. However, this is only one of the several important capitulation indicators. For those wanting next-level information, listen to the podcast in Arora Ambassador Club titled “The Ten Secrets Of Epic Capitulation Riches.”
- RSI on the chart shows that TLT is oversold and beginning to bounce. This indicates that if the macro data is favorable, TLT can move up quickly.
- In The Arora Report analysis, the short interest in bonds right now is likely the highest ever. Assuming our analysis is correct, if favorable macro data is released, TLT can experience a major short squeeze and run up.
- In The Arora Report analysis, all of the foregoing is only short term. For the long term, The Arora Report has a negative view of bonds due to high debt levels, high deficits, and persistent inflation.
- Weak Automatic Data Processing Inc (NASDAQ: ADP) data this morning is lifting bonds, and in turn, stocks. ADP is the largest private payroll processor in the country. It uses its data to give a glimpse of the jobs picture ahead of the official jobs report that will be released on Friday. ADP employment change came at 89K vs. 150K consensus.
- There are three pieces of data ahead that can dramatically move TLT, and in turn, the stock market.
- ISM Non-Manufacturing Index will be released today at 10am ET. The consensus is 53.7.
- Initial claims will be released at 8:30am ET on October 5. The consensus is 225K. Initial 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.
- The jobs report will be released at 8:30am ET on October 6. The consensus for non-farm private payrolls is 150K. The consensus for the headline is 158K.
- If the economic data is such that the bonds turn up, the market mechanic of year end chase will start kicking in. If this market mechanic turns out to be to the upside, expect a major rally and a buying opportunity in the stock market. There are never any guarantees. For this reason, it is important to stay in tune with the new data as it comes in. Understanding market mechanics can give you a big edge. For example, about two thirds of the market rise this year is due to market mechanics. For those who want next-level information, a podcast titled “Market Mechanics: Gain An Edge From Year End Chase '' will go live in Arora Ambassador Club today.
- 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.
In the early trade, money flows are negative in Apple Inc (NASDAQ: AAPL) and Meta Platforms Inc (NASDAQ: META).
In the early trade, money flows are mixed in SPDR S&P 500 ETF Trust (ARCA:SPY) 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