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

Mother Of All Reports

Please click here for a chart of SPDR S&P 500 ETF Trust (NYSE:SPY) which represents the benchmark stock market index S&P 500 (SPX).

Note the following:

• The chart shows that the stock market has pulled back below the bottom band of the resistance zone.
• The chart shows that the stock market is still hanging above the mini support zone.
• RSI on the chart shows that the stock market is oversold. Oversold markets tend to bounce.
• The consensus in the stock market has been immaculate everything –  the landing, the Fed, interest rates, earnings, adoption of AI, Russia, China, and the Middle East.
• The jobs report, also known as the mother of all reports, has gone against the market consensus of immaculate everything. The jobs picture is stronger than the consensus. In The Arora Report analysis, this means that the market consensus of six rate cuts in 2024 and seven total rate cuts is not correct. Here are the details:
  • Non-farm private payrolls came at 164K vs. 132K consensus.
  • Non-farm payrolls came at 216K vs. 162K consensus.
  • Unemployment rate came at 3.7% vs. 3.8% consensus.
  • Average hourly earnings came at 0.4% vs. 0.3% consensus.
  • Average work week came at 34.3 vs. 34.4 consensus.
• After the release of the jobs report, stock futures initially fell but the momo crowd aggressively bought the dip.
• In 40 years, the stock market has not been down all first four days of a new year. Stock market bulls’ expectations are that due to oversold conditions, they will be able to run up the stock market. If stock market bulls do not succeed today, it will be a negative and may lead to changes in the protection band. 
• Consider continuing to take profits on tactical positions by scaling out. 
• 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.

Magnificent Seven Money Flows

In the early trade, money flows are mixed in SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust Series 1 (NASDAQ: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 like a yoyo in 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 (NYSE:GLD). The most popular ETF for silver is iShares Silver Trust (NYSE: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 (NYSE:USO).

Bitcoin

Bitcoin (CRYPTO: BTC) is range bound.

Markets

Our very, very short-term early stock market indicator is 🔒. Keep in mind that it is a Friday and short squeezes tend to occur on Fridays. 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 seven 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.

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