To get an edge, this is what you need to know today.
Small caps
Click here for an enlarged version of the small cap chart iShares Russell 2000 ETF IWM.
Please note the following:
- The chart shows the 2021 high for small caps.
- The chart shows the high of small caps in 2023.
- The chart shows that small caps are still well below their 2021 high.
- Small caps staged a big rally in 2023, but haven’t skyrocketed to new highs like the S&P 500. This could be an opportunity for investors. Here’s what investors should keep in mind:
- The IWM could be a recovery operation.
- On the other hand, small caps should have performed better than they did. The difference could be explained by the lack of highly priced AI stocks in the IWM, or the difference could be a warning.
- Small caps are interest rate sensitive and should do well when the Fed cuts rates.
- Small caps are economically sensitive. Therefore, small caps should do well if there is no landing.
- IWM includes many banks. If there was no banking crisis, the IWM should be fine.
- If the overall stock market maintains its gains, small caps offer an opportunity for investors.
- The Fed’s speech is ahead. Michelle Bowman, Tom Barkin and Neel Kashkari from the Fed will speak today.
- The Consumer Price Index (CPI) will be released Tuesday at 8:30 a.m. ET. The stock market assumes that inflation will continue to fall. If the CPI shows inflation continuing to decline, the S&P 500 would rally. On the other hand, if the consumer price index is stronger than expected, there is a lot of air in the stock market and, as a result, it could lead to a rapid pullback.
- Momo gurus are already proactive to prevent a sell-off if data shows inflation is not coming down. The new mantra from the Momo gurus is that stocks will rise even if inflation doesn’t fall. Keep in mind that the real job of Momo gurus is to drive the stock market up under the disguise of analysis.
- As an actionable element, the sum total of the above is in the protection band, which achieves the optimal balance between the various cross currents. Scroll down to see the protection band.
Magnificent Seven Money Streams
In early trades, money flows are positive NVIDIA Corp NVDA.
In early trades, money flows are neutral the Apple company AAPL, Amazon.com, Inc. AMZN, Meta Platform Inc HALFAND Microsoft Corp MSFT.
In initial trades, money flows are negative Alphabet Inc Class C GOOG AND Tesla Inc TSLA.
At the beginning of the trade, the money flows are mixed SPDR S&P 500 ETF Trust Fund TO SPY AND Invesco QQQ Trust Series 1 QQQ.
Momo Crowd and Smart Money in stocks
The momo crowd buys shares early in the trade. Smart money is idle in early trades.
Gold
The momo crowd is like a gold yo-yo in early trades. Smart money is idle in early trades.
For the long term, see gold and silver ratings.
The most popular gold ETF is SPDR Gold Trust GLD. The most popular ETF for silver is iShares Silver Trust SLV.
Oil
The momo crowd is like a yo-yo in oil at the start of trading. Smart money is idle in early trades.
For long term, see oil classifications.
The most popular oil ETF is US Oil ETF USE.
Bitcoin
Bitcoin Bitcoin/USD it rose to $48,795, where it encountered resistance. As of this writing he is walking away with mild disappointment that whales didn’t push bitcoin to $50,000 over the weekend. Those who understand the secrets of whales know that whales are very intelligent and preserve the element of surprise, not always doing exactly what is expected.
Protection band and what to do now
It is important for investors to look forward and not in the rearview mirror.
Consider continuing to hold existing good positions, long-term. Based on your individual risk preference, consider a protection band consisting of cash or Treasury bills or short-term tactical trades, as well as short- and medium-term hedges and short-term hedges. 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 liquidity to your hedges. The high protection band is suitable for those who are elderly or conservative. The low end of protection is suitable for those who are younger or aggressive. If you do not hedge, your total liquidity level should be higher than above but significantly lower than cash plus hedges.
It is worth remembering that you cannot take advantage of new upcoming opportunities if you do not have sufficient liquidity. When changing hedge levels, consider changing partial stop quantities for stock (non-ETF) positions; consider using wider stops on the remaining quantities and also allowing more room for high beta stocks. High beta stocks are those that move more than the market.
Traditional 60/40 wallet
Probability-based, inflation-adjusted risk compensation is not conducive to the strategic allocation of long-dated bonds at this time.
Those who wish to stick to the traditional allocation of 60% to stocks and 40% to bonds may consider focusing only on high-quality bonds and bonds with durations of seven years or less. Those looking to make their investments more sophisticated may want to consider using bond ETFs as tactical, not strategic, positions at this time.
The Arora Report is known for its accurate calls. The Arora Report correctly called the financial crash of 2008, the start of a mega bull market in 2009, the COVID crash, the post-COVID bull market, and the bear market of 2022. Click here to sign up for the free Genera newsletter wealth forever.
This article comes from an unpaid freelancer. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.