7073彩票注册The stock market is plunging.
Buying opportunities are developing, but it’s not the right time, with the exception of “nibbles” by those who meet the protection-band criteria. Please read “Stock market investors are asking ‘should I buy or sell?’ Here’s how to decide.”
Last week I warned you that a watershed moment was on the way if stocks couldn’t hold a level that I had provided. Alas, the level has not held. A bigger watershed moment is on the way if the next level doesn’t hold. Please see “A watershed moment is on the way if stocks can’t hold this level.”
Let’s explore with the help of two charts.
Please click for an annotated chart of the Dow Jones Industrial Average ETF US:DIA, which tracks the Dow US:DJIA.
Please click for an annotated chart of S&P 500 ETF US:SPY, which represents the S&P 500 Index US:SPX. For the sake of transparency, this chart was previously published and no changes have been made.
7073彩票注册Note the following:
7073彩票注册? The first chart shows two support zones. The top support zone is marked “support zone.” The bottom support zone is marked “mother of support zones.”
? If the top support zone does not hold, a bigger watershed event is on its way.
? The chart shows the Arora signal to buy the inverse ETF US:SQQQ or short sell the Nasdaq 100 ETF US:QQQ before the big drop in the stock market.
? The second chart shows the prior support zone that has been broken.
7073彩票注册? The second chart shows the “program selling” point where the selling accelerated. This program-selling point and the second chart were provided well in advance before this leg of the stock market drop, giving investors plenty of time to protect themselves.
? The first chart shows that RSI (relative strength index) is very oversold. This indicates that the slightest bit of good news could cause a rip-roaring rally.
7073彩票注册? The first chart shows that volume is still not high. This indicates complacency among investors. In more practical terms, it means there is more downside to come, perhaps after a rally that fails.
Ask Arora: Nigam Arora answers your questions about investing in stocks, ETFs, bonds, gold and silver, oil and currencies. Have a question? Send it to Nigam Arora.
Do’s and don’ts
Here are helpful pointers if your portfolios aren’t protected as much as they should be.
? Do not panic.
? Develop a plan. Hope is not a good strategy.
? Bear markets have some of the sharpest rallies.
? Use the rallies to build protection.
? There is potential for good news in many ways.
7073彩票注册? Start with Arora’s Third Law of Investing and Trading: “Making investing and trading decisions based on probabilities is the only realistic and profitable approach.”
7073彩票注册? The support zone shown on the first chart has about a 30% probability of holding.
? The mother of support zones shown on the first chart has an 80% probability of holding.
At The Arora Report we are receiving questions on popular stocks. Here are the brief answers:
? Apple US:AAPL is not likely to see lasting damage in the developed world but may see lasting damage in the developing world. In the developed world, iPhone sales will only be deferred and not lost. In the developing world, some iPhone sales will be lost forever.
? 7073彩票注册 US:FB and Alphabet US:GOOG US:GOOGL7073彩票注册 will lose some advertising revenue but will benefit by the higher use of their services.
? Amazon US:AMZN will benefit from more deliveries to the home. However, investors should work out the numbers based on a scenario of the coronavirus spreading to Amazon warehouses and Amazon being unable to deliver.
? Tesla US:TSLA may be negatively affected by lower oil prices.
? Intel US:INTC, AMD US:AMD and Microsoft US:MSFT will see sales deferred but not lost.
Answers to your questions
Answers to many of your questions are already in my previous writings this year. You can access some of them by clicking here.
Disclosure: Subscribers to may have positions in the securities mentioned in this article or may take positions at any time. Nigam Arora is an investor, engineer and nuclear physicist by background who has founded two Inc. 500 fastest-growing companies. He is the founder of The Arora Report, which publishes four newsletters. Nigam can be reached at Nigam@TheAroraReport.com.