New Russia Sanctions Trigger A Buy Signal On Oil And Give Gold Second Wind; Government May Back Quantum Computing
Author: The Arora Report | October 23, 2025 12:46pm
New Oil Sanctions
Please click here for an enlarged chart of crude oil futures.
Note the following:
The chart shows a strong move up in oil.
The chart shows when our buy signal was given in anticipation of new sanctions on Russia oil. In our analysis, at this time, stocks, long duration bonds, gold, and bitcoin are very expensive. Oil is the only major asset that is cheap.
The chart shows when new Russian oil sanctions were announced.
The VUD indicator is our proprietary indicator that is the most sensitive measure of net supply and demand in real-time. The orange represents net supply and the green represents net demand. The chart shows the VUD indicator has mostly been green, indicating net demand for oil.
Here are the key points about the sanctions on Russian oil:
The new sanctions are on two Russian giants Lukoil and Rosneft and their subsidiaries.
The sanctions bar companies and countries from doing business with Lukoil and Rosneft. To understand the sanctions, think of a Chinese or Indian company that tries to buy oil from Russia getting hit with U.S. sanctions.
The U.S. is able to enforce these sanctions because the dollar is the reserve currency, and any bank that facilitates any transaction with Russian oil can be sanctioned.
In the world of investments, nothing is straightforward. On one hand, oil is cheap and in theory, the sanctions on Russia should reduce the supply of oil and thereby increase the price of oil. On the other hand, investors need to be mindful of the following:
India and China have been the two major buyers of Russian oil. Now that Russia cannot easily sell oil to India and China, Russian oil may be sold in the black market at a steep discount. Depending upon how much the black market develops, oil prices could drop instead of rising.
President Trump is imposing sanctions on Russian oil to force Russia's President Putin to strike a peace deal with Ukraine. Russia needs money to keep its war machine going. Oil exports are the major source of money that supports Russia's military industrial complex. President Putin could give in, and in such an event, oil prices could collapse.
For the foregoing reasons, it is important for investors to keep the risk control measures in place given in the post on the oil buy signal.
In our analysis, at this time when the stock market is excited about the Fed cutting interest rates, prudent investors should be thinking about the impact of higher oil prices. Higher oil prices can cause an uptick in inflation and thereby make it more difficult for the Fed to cut interest rates. This is especially important because the stock market has already counted the chickens before they have hatched.
Rising oil prices is also a negative for airlines such as American Airlines Group Inc (NASDAQ:AAL), United Airlines Holdings Inc (NASDAQ:UAL), and Delta Air Lines Inc (NYSE:DAL) as well as for cruise lines such as Carnival Corp (NYSE:CCL) and Royal Caribbean Cruises Ltd (NYSE:RCL).
Quantum computing companies are working for the government to potentially take a stake. Initially in overnight trading, quantum computing stocks such as IONQ Inc (NYSE:IONQ), Rigetti Computing Inc (NASDAQ:RGTI), Quantum Computing Inc (NASDAQ:QUBT), and D-Wave Quantum Inc (NYSE:QBTS) experienced major up spikes. However, as of this writing in the premarket, more than half of the gains have evaporated for the following reasons:
The investment from the government is likely to be small such as $10M in each company.
There is a report the Secretary of Commerce is saying that no active discussions are taking place at the highest level.
We previously shared with you the blow-off top signal on gold. In our analysis, gold was well on its way to a significant pullback when the news of Russia oil sanctions hit. Russian oil sanctions are giving the gold rally a second wind. It is important to remind you of our analysis that the seeds of the current gold rally go back to when the U.S. sanctioned Russia after Russia attacked Ukraine. Those sanctions prompted countries such as Turkey, China, and India to start buying more gold to reduce their dollar holdings.
We previously shared with you another meme resurgence in Beyond Meat Inc (NASDAQ:BYND), 1-800-Flowers.Com Inc (NASDAQ:FLWS), and Krispy Kreme Inc (NASDAQ:DNUT). To the dismay of the meme crowd, at least temporarily, the meme rally has collapsed.
Tesla Inc (NASDAQ:TSLA) earnings impact the stock market sentiment. Higher expenses overshadowed record revenue, causing Tesla to come below consensus and whisper numbers. However, sentiment is being cushioned by more visibility of Tesla about to embark on volume production of Optimus robots.
Overall, according to our proprietary sentiment indicator, the sentiment is remaining in the extreme positive zone. In addition to the overall sentiment, investors should pay attention to the momo crowd sentiment because momo crowd sentiment is responsible, in large part, for the latest run up in the stock market, including space stocks such as AST SpaceMobile Inc (NASDAQ:ASTS), nuclear stocks such as Oklo Inc (NYSE:OKLO), Nano Nuclear Energy Inc (NASDAQ:NNE), and Nuscale Power Corp (NYSE:SMR), data center stocks such as CoreWeave Inc (NASDAQ:CRWV), IREN Ltd (NASDAQ:IREN), and Nebius Group NV (NASDAQ:NBIS), and critical mineral stocks such as MP Materials Corp (NYSE:MP), Critical Metals Corp (NASDAQ:CRML), USA Rare Earth Inc (NASDAQ:USAR), TMC the metals company Inc (NASDAQ:TMC), and Lithium Americas Corp (NYSE:LAC).
Yesterday morning we wrote:
After the sentiment among the momo crowd being extremely positive for a long time, the momo crowd sentiment has swung to negative quickly in the matter of a couple of days.
The momo crowd sentiment took another hit yesterday as losses mounted in their favorite stocks. However, today, momo crowd sentiment may pick up on the prospect of the government taking a stake in quantum computing stocks.
Magnificent Seven Money Flows
Most portfolios are now heavily concentrated in the Mag 7 stocks. To get ahead and get an edge, investors need 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), and Microsoft Corp (NASDAQ:MSFT).
In the early trade, money flows are neutral in Apple Inc (NASDAQ:AAPL) and Meta Platforms Inc (NASDAQ:META).
In the early trade, money flows are negative in NVIDIA Corp (NASDAQ:NVDA) and TSLA.
In the early trade, money flows are neutral 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 (NYSE: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).
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.
