To gain an edge, this is what you need to know today.
Speculative Sentiment
Note the following:
India
India continues to be one of the best long term opportunities. As full disclosure, India focused fund Fairfax India Holdings Corp (OTC:FFXDF) is in The Arora Report's ZYX Buy Model Portfolio. Three India focused ETFs, WisdomTree India Earnings Fund (NYSE:EPI), iShares MSCI India Small-Cap ETF (BATS:SMIN), and VanEck India Growth Leaders ETF (NYSE:GLIN), are in The Arora Report's ZYX Emerging Model Portfolio.
The central government budget is always a big event for Indian stocks. The just unveiled budget is great for the long term, but in the short term, investors are spooked due to an increase in capital gains tax. Short term capital gains will have a 20% tax rate, and long term capital gains will have a 12.5% tax rate.
Magnificent Seven Money Flows
In the early trade, money flows are positive in Tesla Inc (NASDAQ:TSLA).
In the early trade, money flows are negative in NVIDIA Corp (NASDAQ:NVDA).
In the early trade, money flows are negative in SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust Series 1 (NASDAQ:QQQ).
Momo Crowd And Smart Money In Stocks
Bitcoin
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 a protection band consisting of cash or Treasury bills or short-term tactical trades as well as short to 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 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.
A protection band of 0% would be very bullish and would indicate full investment with 0% in cash. A protection band of 100% would be very bearish and would indicate a need for aggressive protection with cash and hedges or aggressive short selling.
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.
This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy.
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