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<h4>Trump Front And Center</h4>



Please click here for a chart of gold futures (GC_F).



Note the following:



<ul>
<li>President Trump's speech at Davos is front and center.  President Trump is speaking as of this writing.</li>



<li>The chart shows gold futures are approaching the magnet.</li>



<li>The chart shows gold futures are well above the 200 day moving average.  On one hand, this indicates momentum and enthusiasm.  On the other hand, this indicates there is a high risk in buying gold here.</li>



<li>As full disclosure, we are long gold from an average of $1103.</li>



<li>In our analysis, gold has further to go as the dollar gets debased.  Gold can ultimately go to $10,000 if government policies do not change.  In the short term, gold is overbought and vulnerable to a pullback.  </li>



<li>We noted that interest rates in Japan impact the U.S. markets.  Now, Treasury Secretary Bessent is pointing to Japan as the cause of market turmoil in the U.S.  </li>



<li>On the positive side, Japan's Finance Minister Katayama has succeeded in calming the markets.</li>



<li>In our analysis, if interest rates in Japan continue to rise, it could trigger over $100B in selling in the U.S. markets.</li>



<li>Tomorrow will bring a flood of economic data at 8:30am ET:
<ul>
<li>PCE data, the Fed's favorite inflation gauge, for October and November</li>



<li>Personal income and spending data for October and November</li>



<li>Initial jobless claims</li>



<li>Q3 GDP and GDP deflator</li>
</ul>
</li>
</ul>



<h4>Magnificent Seven Money Flows</h4>



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 NVIDIA Corp (NASDAQ:NVDA).



In the early trade, money flows are neutral in Apple Inc (NASDAQ:AAPL), Meta Platforms Inc (NASDAQ:META), and Tesla Inc (NASDAQ:TSLA).



In the early trade, money flows are negative in Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc Class C (NASDAQ:GOOG), and Microsoft Corp (NASDAQ:MSFT).



In the early trade, money flows are negative in SPDR S&amp;P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust Series 1 (NASDAQ:QQQ).



<h4>Momo Crowd And Smart Money In Stocks</h4>



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).



<h4>Bitcoin</h4>



Bitcoin (CRYPTO: BTC) is seeing selling.



<h4>What To Do Now</h4>



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.



<h4>Traditional 60/40 Portfolio</h4>



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.

Gold is currently overbought and vulnerable to a pullback, as indicated by its position above the 200-day moving average. President Trump's speech at Davos is a focal point, with potential implications for market sentiment. Economic data releases are expected soon, including PCE data and jobless claims. Money flows in major stocks show mixed signals, with positive flows in NVIDIA and negative in others. Investors are advised to maintain long-term positions while considering protective measures like cash or short-term trades. The traditional 60/40 portfolio strategy may need adjustments in the current market environment.

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