To gain an edge, this is what you need to know today.

Contrasting Moves

Please click here for a chart of SPDR S&P 500 ETF Trust (NYSE:SPY) which represents the benchmark stock market index S&P 500 (SPX).

Note the following:

• The chart shows that the stock market pulled back to the top band of the top support zone on rising yields.
• This morning the stock market is moving up, bouncing from the support zone on news from the Middle East.
• Prudent investors should notice a statement by Iran’s Foreign Minister Hossein Amirabdollahian in Beirut, Lebanon. He warned that there was a “real possibility” of opening other fronts if Israel continues to intensify the war in Gaza.
• Prudent investors should also pay attention to a statement by Ali Barakeh, a senior Hamas official, that Iran and Hezbollah “will join the battle if Gaza is subjected to a war of annihilation.”
• Of special interest is that the momo crowd aggressively bought stocks on these two statements, while smart money is buying safe havens of dollar, Treasuries, gold, and silver.
• Israel has ordered 1.1M Palestinians living in northern Gaza to evacuate within 24 hours and move to southern Gaza.
• The problem is that Gaza is one of the most densely populated places on Earth.  It is very small – only 140 square miles. It appears that there is simply not enough space in southern Gaza for 1.1M more people.
• The United Nations is warning that the evacuation order is “impossible and could result in devastating humanitarian consequences.”
• The momo crowd is aggressively buying stocks on the Israeli evacuation order. Smart money is buying safe havens of dollar, Treasuries, gold, and silver.
• Bank earnings this morning from JPMorgan Chase & Co (NYSE:JPM), Wells Fargo & Co (NYSE:WFC), Citigroup Inc (NYSE:C), and PNC Financial Services Group Inc (NYSE:PNC) are better than expected. Earnings from UnitedHealth Group Inc (NYSE:UNH), the largest healthcare insurer, are also better than expected.
• Prudent investors should note that Jamie Dimon, the CEO of JPM and the most respected banker in the world, is saying in the JPM earnings report that “now may be the most dangerous time the world has seen in decades.”
• In view of the news from the Middle East and Jamie Dimon’s statement, investors should pay attention to money flows in the Magnificent Seven stocks and indexes. Please see the section below.
• In The Arora Report analysis, it is important that investors pay attention to not only what is happening but how the market is responding. Stocks are being bought on trust in market mechanics pushing the stock market higher.
• Some of the buying in the stock market is being triggered by Danish company Novo Nordisk A/S (NYSE:NVO) raising its growth targets due to the popularity of weight loss drugs Ozempic and Wegovy. Eli Lilly And Co (NYSE:LLY) stock is also moving up in sympathy.
• 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 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 aggressively buying stocks in the early trade. Smart money is 🔒 stocks in the early trade. To see the locked content, please click here to start a free trial.

Gold

The momo crowd is selling gold in the early trade. Smart money is 🔒 gold in the early trade.

For longer-term, please see gold and silver ratings.

The most popular ETF for gold is SPDR Gold Trust (NYSE:GLD). The most popular ETF for silver is iShares Silver Trust (NYSE:SLV). 

Oil

The momo crowd is selling oil in the early trade. Smart money is 🔒 oil in the early trade.

For longer-term, please see oil ratings.

The most popular ETF for oil is United States Oil ETF (NYSE:USO).

Bitcoin

Bitcoin (CRYPTO: BTC) is range bound.

Markets

Our very, very short-term early stock market indicator is 🔒. Keep in mind today is Friday, and there will be two opposing crosscurrents.  On the positive side, if the market continues to move up there will likely be a short squeeze. On the negative, many institutional investors will likely lighten up by selling into the strength not wanting to take the risk of news from the Middle East going into the weekend. 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 🔒 in cash or Treasury bills or allocated to short-term tactical trades; and short to medium-term hedges of 🔒, and short term hedges of 🔒. This is a good way to protect yourself and participate in the upside at the same time.

You can determine your protection bands by adding cash to hedges. The high band of the protection is appropriate for those who are older or conservative. The low band of the protection is appropriate for those who are younger or aggressive. If you do not hedge, the total cash level should be more than stated above but significantly less than cash plus hedges.

It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash. When adjusting hedge levels, consider adjusting partial stop quantities for stock positions (non ETF); consider using wider stops on remaining quantities and also allowing more room for high beta stocks. High beta stocks are the ones that move more than the market.

Traditional 60/40 Portfolio

Probability based risk reward adjusted for inflation does not favor long duration strategic bond allocation at this time.

Those who want to stick to traditional 60% allocation to stocks and 40% to bonds may consider focusing on only high quality bonds and bonds of five year duration or less. Those willing to bring sophistication to their investing may consider using bond ETFs as tactical positions and not strategic positions at this time.

The Arora Report is known for its accurate calls. The Arora Report correctly called the 2008 financial crash, the start of a mega bull market in 2009, the COVID crash, the post-COVID bull market, and the 2022 bear market.  Please click here to sign up for a free forever Generate Wealth Newsletter.