Take Profits On Short Term Hedges

Short term hedges have become very profitable.  As full disclosure, yesterday, we gave a signal to take partial profits.  Consider taking more partial profits on the remaining short term hedges.

Euphoric Stock Market

Please click here for an enlarged 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 the stock market previously went to the low band of zone 1 (support).
  • The chart shows the euphoria yesterday brought the stock market from within the support zone to above the support zone.
  • The chart shows in the early trade today, yesterday's euphoric rally is extending.
  • RSI on the chart shows the stock market is no longer oversold.
  • Yesterday, in the Interim Capsule, we shared with you Iran's president was saying Iran was open to ending the war with guarantees.  This was the reason behind the euphoric stock market rally.
  • There have been reports that President Trump wanted the U.S. to be out of Iran even if there was not a deal with Iran and the U.S. could exit even if the Strait of Hormuz was not open.  This added to the euphoria.
  • Now there is a contradictory report that the U.S. will consider a ceasefire when the Strait of Hormuz is open.  The contradictory report is taking some steam out of the euphoria as of this writing.
  • Oil is the leading indicator.  Initially, oil held up and then fell.  As of this writing, oil is rising again on the contradictory report.
  • There are reports that President Trump will address the nation this evening.
  • It is still not clear what is going to happen.  Having said that, the U.S. exiting the Iran war will be a tactical win for the following reasons:
    • President Trump believes Iran's nuclear plans have been set back by 15 – 20 years.
    • Iran's missile production capability has been drastically diminished.
    • Iran has suffered massive damage to its armed forces and military infrastructure.
  • On the strategic side, a U.S. withdrawal without a comprehensive agreement will be problematic for the following reasons:
    • Gulf nations may conclude that the U.S. having bases in their countries is not a good idea.
    • Even a diminished Iran may strategically become more dominant because the Gulf nations will know that Iran can attack them and the U.S. cannot protect them.
    • China will take advantage of the situation to develop closer relationships in the Middle East.
    • China will be emboldened to attack Taiwan.
    • Russia will be emboldened in Ukraine.
  • Consumer confidence came at 91.8 vs. 88.0 consensus.
  • JOLTS job openings came at 6.882M vs. 6.795M consensus.
  • ADP employment change came at 62K vs. 42K consensus.
  • Prudent investors closely watch retail sales data as the U.S. economy is 70% consumer based.  Retail sales are stronger than expected.  Here is the latest retail sales data:
    • October headline retail sales came at 0.6% vs. 0.5% consensus.
    • October retail sales ex-auto came at 0.5% vs. 0.3% consensus.
  • ISM Manufacturing Index will be released today at 10am ET.
  • Initial jobless claims will be released on Thursday at 8:30am ET.
  • The jobs report, the mother of all numbers, will be released on Friday at 8:30am ET followed by ISM Non-Manufacturing Index at 10am ET.  Note, the stock market will be closed for the Easter holiday.
  • Expect blind money to flow into the stock market today and tomorrow.  Blind money is the money that flows into the stock market on the first two days of the month without any analysis irrespective of market conditions.

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 Apple Inc (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc Class C (NASDAQ:GOOG), Meta Platforms Inc (NASDAQ:META), Microsoft Corp (NASDAQ:MSFT), NVIDIA Corp (NASDAQ:NVDA), and Tesla Inc (NASDAQ:TSLA).

In the early trade, money flows are very positive in S&P 500 ETF (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).

Oil

After falling earlier today, oil futures are rising again on a contradictory report described above.

API crude oil inventories came at a build of 10.263M barrels vs. a consensus of a draw of 1.3M barrels.  This is war related.

Bitcoin

Bitcoin (CRYPTO: BTC) is range bound.

What To Do Now

Consider continuing to hold good, very long term, existing positions and add tactical positions based on signals.

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.