Silver Approaching The Magnet

Please click here for an enlarged chart of Silver Trust (NYSE:SLV).

Note the following:

• President Trump is increasing pressure on Venezuela by seizing more oil tankers.
• The chart shows silver took another leg up on the Venezuela news.
• Our call has been silver futures can go to $70, and that is the magnet shown on the chart.  Silver futures are trading at $68.83 as of this writing.
• The equivalent of the $70 magnet in silver futures is $63.51 in silver ETF SLV as shown on the chart.
• RSI on the chart shows SLV is overbought but still has room to run up further.
• As full disclosure, SLV is in our portfolio. We are long from an average of $13.96.
• Gold is also hitting a new high on the Venezuela news.  As full disclosure, SPDR Gold Trust (NYSE:GLD) is in our portfolio.  Gold miner Newmont Corporation (NYSE:NEM) is in our portfolio and is also hitting a new high.
• Along with gold and silver, copper is also hitting a new high.  As full disclosure, United States Copper Index Fund (NYSE:CPER) is in our portfolio.  Major copper producer Freeport-McMoRan Inc (NYSE:FCX) is in our portfolio.  Another copper producer that is a buyout target First Quantum Minerals (FQVLF) is in our portfolio.  We are long FQVLF from an average of $9.09.
• Oil is also seeing buying on the Venezuela news.
• Stocks are also seeing buying in the early trade on Venezuela news.
• There is no change to our prior Venezuela call.  We previously wrote:

If the U.S. attacks Venezuela and Venezuela resists, expect the foregoing markets [gold, silver, oil, and stocks] to go higher.  On the other hand, if Venezuela gives in or the U.S. prevails easily, expect all of the foregoing markets to go lower.

• Buying in stocks in the early market is also driven by two additional factors:
  • FOMO (fear of missing out) about the Santa Claus rally that may be ahead
  • Weekend pump by momo gurus
• Buying in the early trade is very aggressive in AI stocks, such as Micron Technology Inc (NASDAQ:MU), IREN Ltd (NASDAQ:IREN), Oracle Corp (NYSE:ORCL), CoreWeave Inc (NASDAQ:CRWV), and Nebius Group NV (NASDAQ:NBIS).
• In the early trade, there is also aggressive buying in space stocks such as Rocket Lab Corp (NASDAQ:RKLB), AST SpaceMobile Inc (NASDAQ:ASTS), and Firefly Aerospace Inc (NASDAQ:FLY). As full disclosure, Firefly Aerospace Inc (FLY) is in our portfolio, and a signal was issued to take partial profits this morning.

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 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 neutral in Apple Inc (NASDAQ:AAPL).

In the early trade, money flows are positive in SPDR S&P 500 ETF Trust (NYSE: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 (GLD).  The most popular ETF for silver is iShares Silver Trust (SLV).  The most popular ETF for oil is United States Oil ETF (NYSE:USO).

Bitcoin

Bitcoin (CRYPTO: BTC) is seeing buying.

What To Do Now

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.

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.