Money Flowing Into Silver

Please click here for an enlarged chart of silver futures (SI_F).

Note the following:

• The chart shows a strong move in silver.
• The chart shows silver is now a hair close to the magnet of $100.
• Gold is close to the magnet of $5000.
• The short term move in silver is exacerbated by two factors:
  • Money is moving out of cryptos and into silver.
  • Short squeeze
• Prudent investors should note this is proof positive that many so-called crypto die-hards did not really believe in cryptos.  They were in cryptos simply because cryptos were moving up.  Now that cryptos have stalled and silver is moving, these same investors have become the biggest silver bulls. 
• We provide momo crowd and smart money flows data in the Morning Capsules.  Momo crowd flows are good for short term trades but not for longer term investments.  For longer term investments, investors should consider following smart money flows.  Following the momo crowd and smart money flow data gives investors a big edge.
• The U.S. stock rally has stalled in the early trade on hawkish Bank of Japan (BOJ).  Due to the carry trade, Japan is important for U.S. markets.  BOJ held rates as expected but the tone is definitely hawkish.  BOJ has raised four of its six inflation projections.
• In London trading, yen quickly spiked up versus the dollar.  In our analysis, Japan may have done rate checks with banks as a prelude to intervention.
• Japan's finance minister Katayama said she was watching the yen closely.
• Japan's snap election is set for February 8.
• Elon Musk's SpaceX is likely to be the hottest IPO in a decade.  SpaceX is the largest private company.  There is speculation that the IPO valuation will be about $1.5T.  SpaceX has now lined up bankers.  In our analysis, in a deliberate strategy to run up SpaceX stock post IPO, bankers are likely to create artificial scarcity.  Scarcity will likely be achieved by offering $20B – $30B worth of stock out of $1.5T.
• Tesla Inc (NASDAQ:TSLA) plans to start selling humanoid robots next year.  As full disclosure, TSLA stock is in our portfolio.
• Stocks of memory and disk drive makers Micron Technology Inc (NASDAQ:MU), SanDisk Corp (NASDAQ:SNDK), Western Digital Corp (NASDAQ:WDC), Seagate Technology Holdings PLC (NASDAQ:STX) have been running up on a rumor that Samsung Electronics Co Ltd (OTC:SSNLF) is increasing memory prices by 80%.  Samsung is denying the rumor, but in the early trade, these stocks continue to levitate.
• Yesterday, we gave a signal to take partial profits in Intel Corp (NASDAQ:INTC) prior to release of earnings.  At the time of the signal, INTC stock was trading around $54. INTC stock has traded as low as $46.51 in the premarket.  The reason for the drop in INTC stock is that Intel is capacity constrained and lowered the guidance. 
• On the positive side, China is finally advising companies such as Alibaba Group Holding Ltd – ADR (NYSE:BABA) to prepare orders for H200 chips from NVIDIA Corp (NASDAQ:NVDA).
• The FOMC meeting is next week.  In our analysis, there is a 85% probability that the Fed will not cut rates.
• PCE, personal income, and personal spending came roughly inline with consensus.

Magnificent Seven Money Flows

Most portfolios are now heavily concentrated in the Mag 7 stocks.  For this reason, it is important 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 NVIDIA Corp (NASDAQ:NVDA).

In the early trade, money flows are neutral in Amazon.com, Inc. (NASDAQ:AMZN) and Alphabet Inc Class C (NASDAQ:GOOG).

In the early trade, money flows are negative in Apple Inc (NASDAQ:AAPL), Meta Platforms Inc (NASDAQ:META), Microsoft Corp (NASDAQ:MSFT), and Tesla (TSLA).

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

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 (NYSE:GLD).  The most popular ETF for silver is iShares Silver Trust (NYSE:SLV).  The most popular ETF for oil is United States Oil ETF (NYSE:USO).

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.