Good News For Investors – American Might Temporarily Wins Against Iran Without Firing A Shot

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

Good News

Please click here for a chart of oil futures.

Note the following:

• The chart shows when Hamas attacked Israel.
• The fear was that Iran would open a second northern front against Israel, escalating the Middle East war.
• The U.S. responded by sending two aircraft carrier groups to the Middle East to deter Iran and its proxies from opening a northern front against Israel.
• The falling trendline on the chart shows that investors came to believe there was a rethink in Iran as it appeared not to directly fight the U.S.
• The latest drop in oil shown on the chart came after the U.S. sent a nuclear submarine.
• The indication from our sources is that Iran is concluding that fighting the U.S. directly will be a losing proposition.
• RSI on the chart shows that oil is now very oversold.
• Temporarily, the U.S. military might has won. However, prudent investors need to keep in mind that the Middle East is very volatile and things can change very quickly.
• The U.S. is staying on the offensive. The latest is that U.S. fighters bombed a weapons depot used by Islamic Revolutionary Guard of Iran in Syria.
• Oil coming down is deflationary.
• Oil coming down is raising hopes that the Fed will soon start cutting rates.
• As speculation builds of the Fed cutting rates, there is a distinct possibility of a second short squeeze leg in bonds. If the second short squeeze leg in bonds starts, it in turn will trigger another rally in the stock market.
• For the time being, stocks have to contend with technically overbought conditions.
• 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.

Jobless Claims

Jobless claims show that the jobs picture remains strong. Initial jobless claims came at 217K vs. 220K consensus. Jobless claims is a leading indicator and carries heavy weight in our adaptive ZYX Asset Allocation Model with inputs in ten categories. In plain English, adaptiveness means that the model changes itself with market conditions. Please click here to see how this is achieved. One of the reasons behind The Arora Report’s unrivaled performance in both bull and bear markets is the adaptiveness of the model. Most models on Wall Street are static. They work for a while and then stop working when market conditions change.

China Facing Deflation

China is facing deflation. October CPI fell 0.1% vs. 0.0% consensus.

Magnificent Seven Money Flows

In the early trade, money flows are positive in Amazon.com, Inc. AMZN, Alphabet Inc Class C GOOG, Meta Platforms Inc META, Microsoft Corp MSFT, and NVIDIA Corp NVDA.

In the early trade, money flows are negative in Tesla Inc TSLA and Apple Inc AAPL.

In the early trade, money flows are mixed in SPDR S&P 500 ETF Trust SPY and Invesco QQQ Trust Series 1 QQQ.

Momo Crowd And Smart Money In Stocks

The momo crowd is buying stocks in the early trade. Smart money is 🔒 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 🔒 in the early trade.

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

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

Oil

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

For longer-term, please see oil ratings.

The most popular ETF for oil is United States Oil ETF USO.

Bitcoin

Bitcoin BTC/USD has moved over $37,000. Retail investors are rushing into bitcoin on speculation that whales will take advantage of the lack of liquidity over the weekend to run bitcoin to $40,000.

Markets

Our very, very short-term early stock market indicator is 🔒. 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.