Nasdaq Pulls Back to Support Zone; Momo Aggressively Buys Stocks; Whales Dump $45B of Bitcoin

Author: The Arora Report | November 05, 2025 11:57am

Momo Buys On Pullback

Please click here for an enlarged chart of Invesco QQQ Trust Series 1 (NASDAQ:QQQ).

Note the following:

• The chart shows QQQ has pulled back to the top of zone 1 (support).
• Such a pullback is common and necessary.
• In our analysis, as long as QQQ does not break below the low band of zone 1, the thesis of the year end chase remains intact.
• Prudent investors should be mindful of three points:
  • Due to the government shutdown, there is not as much data as prudent investors would like.  In many ways, the stock and bond markets are flying blind.
  • The Supreme Court hearing on Trump tariffs is today.  Bettors on betting markets are betting President Trump will lose.  On Polymarket, the probability of President Trump winning is 39%, and on Kalshi, it is 41%.  If President Trump loses, he has many other avenues to impose tariffs available to him under the law.
  • If President Trump loses, there will be two crosscurrents.  One one side, interest rates could rise because the bond market is counting on tariff revenue.  On the other side, inflation may come down and profitability of corporations may go up.
• In our analysis, the reason behind the market pulling back to zone 1, instead of going up, is the shift in the sentiment.  Sentiment has shifted from extreme positive to very positive.
• The momo crowd has been responsible for the extreme froth that has built up.  Some of this froth has now come off.
• The momo crowd is fighting back and buying exactly the same stocks they were chasing before.
• Momo guru pitches are so seductive that the momo crowd always has a fresh new supply of investors. While some momo accounts are being decimated, the new money momo gurus are attracting keeps the momo crowd in a dominant position.
• As we have been sharing with you, valuations are very high, and as such, do not provide support for the stock market when sentiment changes.
• One issue facing the market is that whisper numbers have moved very high. Advanced Micro Devices Inc (NASDAQ:AMD) earnings provide a great illustration.  Advanced Micro Devices reported great earnings better than consensus, but the stock fell because the reported numbers were below the whisper numbers.
• Younger consumers continue to pull back.  This was the theme from Mediterranean restaurant chain CAVA Group Inc (NYSE:CAVA) earnings.  Previously, the same theme was in Chipotle Mexican Grill Inc (NYSE:CMG) earnings.
• The economy has become a K-shaped economy.  The top 20% continue to do well and spend money.  The rest of the population is pulling back.
• ADP is the largest private payroll processor in the country.  ADP uses its data to provide a glimpse of the official jobs report.  The official jobs report is unlikely to be released due to the government shutdown.  ADP Employment Change came at 42K vs. 26K consensus.  In our analysis, even though the headline looks good, hiring is slowing.

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 Alphabet Inc Class C (NASDAQ:GOOG), Meta Platforms Inc (NASDAQ:META), NVIDIA Corp (NASDAQ:NVDA), and Tesla Inc (NASDAQ:TSLA).

In the early trade, money flows are neutral in Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corp (NASDAQ:MSFT), and Apple (AAPL).

In the early trade, money flows are positive in SPDR S&P 500 ETF Trust (NYSE:SPY)and Nasdaq 100 ETF (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).

Oil

API crude inventories came at a build of 6.5M barrels vs. a consensus of a draw of 2.4M barrels.

Bitcoin

Bitcoin (CRYPTO: BTC) briefly fell below $100K as whales dumped $45 billion of bitcoin.  Retail investors aggressively bought the dip.  The pattern persists – whales opportunistically trade their bitcoins for dollars; retail investors continue to trade their dollars for bitcoin.

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.

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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.

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