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To gain an edge, this is what you need to know today.
Please click here for a chart of Invesco QQQ Trust Series 1 (NASDAQ: QQQ).
Note the following:
Q1 GDP-third estimate came at 2.0% vs. 1.3% consensus. This indicates that the economy has been very strong in the first quarter. Keep in mind that this is a lagging indicator. The Arora Report system focuses on leading indicators.
Initial jobless claims came at 239K vs. 266K consensus. This is a leading indicator and carries heavy weight in the adaptive ZYX Asset Allocation model. The latest data is very strong, indicating a robust jobs picture. The jobs picture continues to be strong at the low end.
The momo crowd is buying stocks in the early trade. Smart money is inactive in the early trade.
Unlike the stock market, gold is paying attention to the central bankers.
Gold is being sold after hawkish comments from central bankers from the U.S., E.U., and U.K. in the ECB forum in Sintra, Portugal.
The momo crowd is selling gold in the early trade. Smart money is inactive in the early trade.
For longer-term, please see gold and silver ratings.
The momo crowd is buying oil in the early trade. Smart money is inactive in the early trade.
For longer-term, please see oil ratings.
Bitcoin (CRYPTO: BTC) is range bound. There is speculation that whales will take advantage of the low liquidity holiday period to run up bitcoin to $32,000.
Our very, very short-term early stock market indicator is neutral but expect the market to open higher. 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.
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 21% - 39% in cash or Treasury bills or allocated to short-term tactical trades; and short to medium-term hedges of 3% - 6%, and short term hedges of 5% - 8%. 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.
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.