Market Volatility: Treasury Auctions, Stock Selloffs, and Global Economic Factors

Power Of Oversold Bounce Overcomes Another Weak Treasury Auction - Apple (NASDAQ:AAPL)

To gain an edge, this is what you need to know today. Weak Treasury Auction Please click here for an enlarged chart of SPDR S&P 500 ETF Trust SPY which represents the benchmark stock market index S&P 500 (SPX). Note the following: The chart shows that the stock market is consolidating around the support zone. RSI on the chart shows that the stock market has moved out of the oversold zone. The price action in the stock market today will depend on the battle between smart money and the momo crowd. The momo crowd is buying on the belief that the correction is over and the Fed will come to the rescue. Smart money is trying to reduce risk ahead of the weekend. If a short squeeze starts, the market can go much higher. Today is a Friday. Short squeezes tend to start on Fridays. The pattern traced by the volatility index VIX suggests a fair probability of the correction being over. We shared with you yesterday that the stock market was oversold and oversold markets tend to bounce. The chart shows that yesterday the oversold bounce was so strong that it overcame a weak Treasury auction. Here are the results of the Treasury auction: $25B 30-year Treasury bond auction High yield: 4.314% (When-Issued: 4.283%) Bid-to-cover: 2.31 Indirect bid: 65.3% Direct bid: 15.5% The price action on Thursday on a weak Treasury auction was directly opposite of the price action on Wednesday. On Wednesday, the stock market fell out of bed after weak Treasury auction results were reported. In anticipation of weak Treasury results on Thursday, many investors sold short. On Thursday when the stock market did not immediately fall on weak Treasury results, short sellers started covering. This buying led to a short squeeze, causing the stock market to go higher. In The Arora Report analysis, in view of the rising national debt and high deficits, from a macro perspective, prudent investors should be concerned about weak Treasury auctions. This is especially important because, under Yellen, the U.S. Treasury is manipulating the issuance to prevent weak Treasury auctions. This is one of the elements that go into determining the protection band. Investors should pay attention to the protection band. Overnight, futures were higher based on the momentum from yesterday. As we get closer to the opening, there is wider recognition that yesterday's rally was short covering and an oversold bounce. This is bringing in selling and stock futures have turned negative as of this writing. The foregoing illustrates that there are a number of crosscurrents that move the stock market. For example, those who predicted on Thursday that the Treasury auction would be weak were correct but the market reaction was opposite to what would have been expected by less informed investors. At least two Fed officials are not onboard with the market's demands for an emergency rate cut. Fed President Tom Barkin expressed that there is time for the Fed to determine if action is required. Fed President Jeffrey Schmid said that because inflation is still above the target and the labor market is healthy it is not time for a rate cut. Magnificent Seven Money Flows In the early trade, money flows are positive in Microsoft Corp MSFT and NVIDIA Corp NVDA. In the early trade, money flows are neutral in Amazon.com, Inc. AMZN. In the early trade, money flows are negative in Apple Inc AAPL, Alphabet Inc Class C GOOG, Meta Platforms Inc META, and Tesla Inc TSLA. In the early trade, money flows are mixed in SPY and Invesco QQQ Trust Series 1 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 GLD. The most popular ETF for silver is iShares Silver Trust SLV. The most popular ETF for oil is United States Oil ETF USO. Bitcoin Bitcoin BTC/USD has moved above $60,000 on hopes that bitcoin whales will run up bitcoin this weekend. 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 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. Market News and Data brought to you by Benzinga APIs

No 'Back Up The Truck And Buy Stocks' Signal - CTAs' Positioned To Sell The Rallies - Apple (NASDAQ:AAPL)

To gain an edge, this is what you need to know today. Carry Trade Unwind Not Over Please click here for an enlarged chart of Nasdaq 100 ETF QQQ. Note the following: The chart shows that QQQ gapped down and opened yesterday below the support/resistance zone. The chart shows the dip was bought. The chart shows QQQ is now in the support/resistance zone. The chart shows that drop yesterday occurred on higher volume. This indicates conviction in selling. The chart shows there is buying this morning. There are ten different indications that combine together to show a capitulation. In The Arora Report analysis, nothing even close to a capitulation has happened. When a capitulation happens, it often leads to a 'back up the truck and buy stocks' signal. There is no such signal at this time. The carry trade unwind was the primary cause of the sell off yesterday. There is a widespread mistaken belief among less informed investors that the carry trade unwind is over. In The Arora Report analysis, only those funds that were overstretched were forced to unwind yesterday. In The Arora Report analysis, those with deeper pockets will take advantage of rallies to unwind the carry trade. The buy the dip mentality is well and alive. It is on display in Japan, where stocks jumped about 10% overnight. Commodity Trading Advisors (CTAs) manage about $300B. These advisors primarily trade futures in a systematic manner. In The Arora Report analysis, CTAs were caught by surprise over the last three days. Positioning of CTAs is such that they are likely to sell the rallies. On the positive side, momo gurus have a new narrative. Their narrative is that the Fed will cut at least by 50 bps three times this year. The momo gurus are also demanding that the Fed cut interest rates by 75 bps in an emergency meeting. This narrative seems to be working. The momo crowd is back to aggressively buying stocks. In The Arora Report analysis, without further turbulence, there is almost zero probability of an emergency Fed meeting and an immediate 75 bps cut. However, if the Fed were to cut by 75 bps, there would likely be a rip roaring stock market rally, leading to new highs. The buying the dip mentality was so strong yesterday that Wall Street's fear gauge VIX (VIX) saw the biggest intraday drop ever in history. VIX dropped from the intraday high of 65 to close at 38. This indicates that fear evaporated among the momo crowd very quickly. 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, NVIDIA Corp NVDA, and Tesla Inc TSLA. In the early trade, money flows are negative in Apple Inc AAPL. In the early trade, money flows are positive in SPDR S&P 500 ETF Trust SPY and Invesco QQQ Trust Series 1 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 GLD. The most popular ETF for silver is iShares Silver Trust SLV. The most popular ETF for oil is United States Oil ETF USO. Bitcoin Bitcoin BTC/USD is being bought as bitcoin whales are promoting the idea that support at $50,000 held and now is the time to buy. 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 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. Market News and Data brought to you by Benzinga APIs

Raise Cash And Hedges, Selling In Apple, Amazon, Nvidia, And Tesla - Weak Jobs Report - Apple (NASDAQ:AAPL)

To gain an edge, this is what you need to know today. Raise Cash And Hedges Consider slowly raising cash and hedges. It is especially important to hedge AI and tech stocks. As full disclosure, in addition to overall hedges, The Arora Report has existing additional hedges on positions such as Alphabet Inc Class C GOOG, Micron Technology Inc MU, Apple Inc AAPL, NVIDIA Corp NVDA, Meta Platforms Inc META, Applied Materials, Inc. AMAT, Qualcomm Inc QCOM, NXPI, Amazon.com, Inc. AMZN, and Microsoft Corp MSFT. Technology stocks and ETFs are very oversold. Oversold markets tend to bounce. The appropriate time to raise cash and increase hedges is on bounces - it should be done slowly. Weak Jobs Report Please click here for an enlarged chart of SPDR S&P 500 ETF Trust SPY which represents the benchmark stock market index S&P 500 (SPX). Note the following: The chart shows that the stock market is falling after the release of the jobs report. The chart shows that the stock market is approaching the top band of the support zone. RSI on the chart shows that the stock market is oversold. Oversold markets tend to bounce. Going into the jobs report, stock futures were down with intense selling in Nasdaq futures. More intense selling came in after the release of the jobs report. The jobs report shows that the employment picture has unexpectedly worsened. Here are the details of the jobs report: Nonfarm payrolls came at 114K vs. 170K consensus. Nonfarm private payrolls came at 97K vs. 153K consensus. Average hourly earnings came at 0.2% vs. 0.3% consensus. Average work week came at 34.2 hours vs. 34.3 hours consensus. Unemployment rate came at 4.3% vs. 4.1% consensus. We shared with you yesterday that initial jobless claims were rising. Initial jobless claims is a leading indicator and carries heavy weight in the highly successful adaptive ZYX Asset Allocation Model with inputs in ten categories. We also shared with you yesterday that the ISM data was very weak. In The Arora Report analysis, taken together, the foregoing raises the specter of stagflation. Stagflation is an enemy of the stock market. Momo gurus persuaded their followers to aggressively buy stocks because they claimed they knew there would either be a soft landing or no landing. The latest data shows that there is a fair probability of a hard landing. Momo gurus being wrong is nothing new. Here is the key question for prudent investors: Will the momo crowd continue to follow momo gurus who are consistently wrong and risk more capital by continuing to aggressively buy stocks? The answer to this question will in large part determine the direction of the stock market over the next few weeks. In The Arora Report analysis, the rise in the Japanese yen is also partly responsible for selling in the stock market. As we previously shared with you, many funds have borrowed in yen and invested in the U.S. stock market. Earnings from Amazon (AMZN) and Intel Corp INTC were below consensus and whisper numbers. This is contributing to selling pressure on the stock market. Apple (AAPL) earnings are better than the consensus and whisper numbers. However, business is poor in China and the growth rate given in the conference call for the current quarter was disappointing. 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. The protection band is one of the large number of unique edges that are available to members of The Arora Report. Magnificent Seven Money Flows In the early trade, money flows are negative in AAPL, AMZN, GOOG, META, MSFT, NVDA, and TSLA. In the early trade, money flows are negative in SPDR S&P 500 ETF Trust SPY and Invesco QQQ Trust Series 1 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 GLD. The most popular ETF for silver is iShares Silver Trust SLV. The most popular ETF for oil is United States Oil ETF USO. Bitcoin Bitcoin BTC/USD is range bound. 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 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. Market News and Data brought to you by Benzinga APIs

The Real Reason Behind Global Stock Carnage - Carry Trade Unwinds - Apple (NASDAQ:AAPL)

To gain an edge, this is what you need to know today. Carry Trade Unwinds Please click here for an enlarged chart of Invesco Currency Shares Japanese Yen Trust FXY. Note the following: The chart shows the rapid rise in the yen. The chart shows that the rapid rise occurred after the Bank of Japan raised rates. As full disclosure, ZYX Allocation by The Arora Report has a long position in yen ETF (FXY). Click here to read where we previously wrote that FXY would act as a hedge. That call has now proven spot on. FXY is rising while stocks are experiencing carnage. We have been sharing with you for a while to keep an eye on actions from the Bank of Japan as they may have a large impact on global stocks, including U.S. stocks. Last week we shared with you that the Bank of Japan raised rates and the carry trade was beginning to unwind. Funds have been borrowing money in yen and buying stocks across the globe. Most notably, funds have been using money borrowed in yen to buy AI related semiconductor stocks and the Magnificent Seven stocks. This is the reason the Magnificent Seven and other AI stocks are now seeing aggressive selling. There are several other factors entering into the mix to drive stocks lower. We have been sharing with you that sentiment had reached the extreme zone. We have also been sharing with you that when sentiment reaches the extreme, it is a contrary signal, i.e. a sell signal. Now we are seeing the aftermath of sentiment reaching the extreme. Warren Buffett has become defensive. Buffett's company, Berkshire Hathaway Inc Class B BRK, sold about half of its Apple Inc AAPL position. BRK.B has reached a record $277B cash position on June 30 vs. $189B on March 31. This largely reflects Buffett selling about half of the AAPL position. This is especially very important because it was only back in May when Buffett said AAPL was a core holding like Coca-Cola Co KO and American Express Company AXP. He has held KO and AXP for a very long time. Delay in NVIDIA Corp NVDA next generation Blackwell chip. Economic data is beginning to show slowing U.S. growth as we shared with you in Morning Capsules last week. Please read last week's Morning Capsules, click here for details. The most notable pieces of data are: ISM Jobless claims Jobs report The momo crowd is facing forced selling due to margin calls. Expect selling pressure to lift when early margin calls are done. Expect another couple of waves of margin calls during the day unless the market rallies substantially. Historically, the two times of heavy forced liquidation are around 10:30am ET and 1pm ET. In addition to the protection band that is protecting The Arora Report members' portfolios, there are additional hedges in the form of gold and silver, as well as hedges on semiconductor stocks and all of the Magnificent Seven stocks with the exception of Tesla Inc TSLA. TSLA is not a portfolio holding. These additional hedges on semiconductor stocks and the Magnificent Seven stocks have now become profitable. Consider starting to book profits in small tranches on these hedges starting right now. The stock market is very oversold and can quickly bounce after forced selling is done. Magnificent Seven Money Flows In the early trade, money flows are negative in Amazon.com, Inc. AMZN, NVDA, Microsoft Corp MSFT, Alphabet Inc Class C GOOG, Meta Platforms Inc META, TSLA, and AAPL. In the early trade, money flows are negative in SPDR S&P 500 ETF Trust SPY and Invesco QQQ Trust Series 1 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 GLD. The most popular ETF for silver is iShares Silver Trust SLV. The most popular ETF for oil is United States Oil ETF USO. Bitcoin The Arora Report call that Bitcoin BTC/USD is not a hedge is being proven right now. Bitcoin is being aggressively sold and is now approaching $50,000. Bitcoin whales unloaded bitcoin to unsuspecting retail investors last month. 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 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. Market News and Data brought to you by Benzinga APIs

Smart Money Sells Momo Crowd's Favorite AI Stock, Bank Of Japan Rescues The U.S. Stock Market - Apple (NASDAQ:AAPL)

To gain an edge, this is what you need to know today. BOJ Saves The U.S. Stock Market Please click here for an enlarged chart of Super Micro Computer Inc SMCI. Note the following: This article is about the big picture, not an individual stock. The chart of SMCI stock is being used to illustrate the point. SMCI is a favorite AI stock of the momo crowd. The momo crowd was eagerly awaiting SMCI earnings, hoping it would run up back to over $1000 and take the rest of the AI stocks much higher along with it. In The Arora Report analysis, the average cost of the momo crowd for SMCI is above $1000. As of this writing in the premarket, SMCI is trading at $529.94. After the earnings release yesterday in the after market, the momo crowd immediately ran up SMCI stock to $727.70. The momo crowd was excited about the 10 for 1 stock split. Smart money took advantage of the strength generated by momo crowd buying to start selling SMCI. The reason smart money sold SMCI is that gross margins came at 11.3% vs. 14.1% consensus. Investors should note that after the drop caused by smart money selling, SMCI has not been able to significantly rally so far in spite of CEO Charles Liang saying that margins will rise to 14% - 17% in FY25. The chart shows that from its peak, SMCI stock has lost 56.4%. The chart shows that at least a modicum of sanity is beginning to set in in AI stocks after the unrestrained frenzy caused by incessant momo crowd buying. The chart should not surprise you because as readers of The Arora Report, you knew a drop was coming. The high in SMCI occurred on March 8. Four days before the high, on March 4, we wrote in the Morning Capsule, SMCI has become a favorite of the momo crowd. The momo crowd incorrectly thinks SMCI has the same potential as NVIDIA Corp NVDA. Investors need to keep in mind the following: SMCI moves a lot more than NVDA. SMCI is so volatile because of the small float. SMCI is an assembler of servers for artificial intelligence. It uses components from NVDA, Micron Technology Inc MU, and Marvell Technology Inc MRVL. NVDA has a large moat to protect it that includes IP for its GPUs. SMCI has no moat and the barrier to entry for competitors is low. SMCI sales are to hyperscalers like Microsoft Corp MSFT, Amazon.com, Inc. AMZN, and Alphabet Inc Class C GOOG. The reason SMCI sales are booming is that they have availability of NVDA chips. As chips become more available to competitors, SMCI will not be able to sustain its sales growth rate. The momo crowd is buying SMCI due to lack of knowledge. However, there are many investors who understand and have the knowledge of SMCI's business. Many such investors are short selling SMCI. For the time being, short sellers are being overwhelmed by the YOLO crowd. Taking all of the above into consideration with the quantitative analysis screen of the ZYX Change Method, in an optimistic case, the fair value of SMCI stock is $442 - $486. As we have previously written and has been demonstrated, a fortune is to be made in artificial intelligence between now and 2030. However, it is not going to be a straight line. At times, it is going to be treacherous. Based on the feedback from investors so far, it is clear that investors who are developing in depth knowledge of investing in AI are doing better than those who are not. The problem investors face is that it is very difficult to find objective investing information on AI as a vast majority of the content in the media is produced with an agenda that is not in investors' best interest. A number of indicators yesterday afternoon were showing that the bounce from Monday's low was running out of steam. When SMCI fell, other AI stocks also fell in the after market. Yesterday evening, it was evident that the most likely course for the stock market today would be to go down. At one point, Japanese stocks were down 2%. Bank of Japan (BOJ) saved markets across the world, including the U.S. stock market. BOJ Deputy Governor Shinichi Uchida said that BOJ will not raise interest rates if markets are unstable. Markets in Asia immediately rallied. The strength carried on to Europe and now to the U.S. The yen has fallen on Uchida's statement. As full disclosure, The Arora Report's ZYX Allocation has a position in FXY and gave a signal Monday to take partial profits near the high. With support from BOJ, the urgency among funds to unwind the carry trade has disappeared. In The Arora Report analysis, some funds may begin establishing new carry trade positions by borrowing in yen and investing the money in U.S. stocks. However, this is only for the short term. In the longer term, the carry trade will unwind again as the yen is very undervalued. The Arora Report call is that ultimately the yen can reach 120 yen to a dollar. As a reference, the yen is trading around 147 as of this writing. Magnificent Seven Money Flows In the early trade, money flows are positive in Amazon (AMZN), Nvidia (NVDA), Microsoft (MSFT), Alphabet (GOOG), Meta Platforms Inc META, Tesla Inc TSLA, and Apple Inc AAPL. In the early trade, money flows are positive in SPDR S&P 500 ETF Trust SPY and Invesco QQQ Trust Series 1 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 GLD. The most popular ETF for silver is iShares Silver Trust SLV. The most popular ETF for oil is United States Oil ETF USO. Bitcoin Bitcoin BTC/USD is seeing buying on the drop in the yen. 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 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. Market News and Data brought to you by Benzinga APIs