Gold’s Path To $10K May Start With Blow-Off Top; Market Bets On Trump-China Deal - Apple (NASDAQ:AAPL)

Gold's Path To $10K

Please click here for an enlarged chart of SPDR Gold Trust (NYSE:GLD).

Note the following:

The chart shows the rapid rise in gold as gold now becomes a meme trade.
The pattern shown on the chart is one of the many factors that, according to our algorithms show a high probability of a blow-off top in the short term.
The plan is to add to the gold position if and when there is a substantial pullback.
We have been bullish on gold for the long term from close to the bottom of this cycle near $1000.
Our next target for gold is $6000.
Prudent investors should know that gold has a path to $10K if the present policies of dollar debasement and financial repression continue. There is nothing on the short term horizon that present policies will change.
The stock market is seeing aggressive buying this morning on optimism that President Trump will cut a deal with China this month, ahead of the end of the tariff hike extension. The optimism is leading to the momo crowd buying in rare earth mineral stocks. MP Materials Corp (NYSE:MP), USA Rare Earth Inc (NASDAQ:USAR), and Critical Metals Corp (NASDAQ:CRML) are in our Portfolio. However, buying here does not make sense. If President Trump cuts a rare earth deal with China, it will increase supply of rare earth minerals to the U.S. and rare earth mineral stocks will fall.
In addition to rare earth mineral stocks, aggressive buying is coming from the momo crowd focused on quantum computing stocks Rigetti Computing Inc (NASDAQ:RGTI), IONQ Inc (NYSE:IONQ), and D-Wave Quantum Inc (NYSE:QBTS) as well as space stocks Rocket Lab Corp (NASDAQ:RKLB) and AST SpaceMobile Inc (NASDAQ:ASTS). eVTOL stocks Archer Aviation Inc (NYSE:ACHR) and Joby Aviation Inc (NYSE:JOBY) are also seeing buying as ACHR signed an agreement to potentially sell 100 Midnight aircraft to Korean Air.
Consumer Price Index (CPI) is expected to be released on Friday.

China

The latest economic data from China is strong. The data gives leverage to China in trade negotiations with the U.S. Here are the details:

Q3 GDP came at 1.1% quarter-over-quarter vs. 0.8% consensus.
Industrial production came at 6.5% year-over-year vs. 5.0% consensus.

Japan

There is agreement in Japan to form a coalition government with Sanae Takaichi as the new prime minister. Nikkei 225 rose over 3%.

Magnificent Seven Money Flows

Most portfolios are now heavily concentrated in the Mag 7 stocks. For this reason, to get ahead and get an edge, dig below the surface, and rise above the noise of the daily news is to pay attention to early money flows in the Mag 7 stocks on a daily basis.

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), and Tesla Inc (NASDAQ:TSLA).

In the early trade, money flows are neutral in Microsoft Corp (NASDAQ:MSFT).

In the early trade, money flows are negative in NVIDIA Corp (NASDAQ:NVDA).

In the early trade, money flows are positive in SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust Series 1 (NASDAQ:QQQ).

Momo Crowd And Smart Money In Stocks

Investors can gain an edge by knowing money flows in SPY and QQQ. Investors can get a bigger edge by knowing when smart money is buying stocks, gold, and oil. The most popular ETF for gold is SPDR Gold Trust (GLD). The most popular ETF for silver is iShares Silver Trust (NYSE:SLV).

Oil

There are aggressive money outflows from oil ETF United States Oil ETF (NYSE:USO). The money flows in USO are also impacted by the rumors that India is cutting its purchase of Russian oil under pressure from President Trump. Until now, India has been buying 38% of Russian oil exports.

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

For longer-term, please see oil ratings.

Bitcoin

Bitcoin (CRYPTO: BTC) is range bound.

What To Do Now

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.

The Arora Report is known for its accurate calls. The Arora Report correctly called the big artificial intelligence rally before anyone else, the new bull market of 2023, the bear market of 2022, new stock market highs right after the virus low in 2020, the virus drop in 2020, the DJIA rally to 30,000 when it was trading at 16,000, the start of a mega bull market in 2009, and the financial crash of 2008. Please click here to sign up for a free forever Generate Wealth Newsletter.

Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.