By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
Reprieve For Apple
Please click here for a chart of Apple stock (AAPL).
Note the following:
- The Morning Capsule is about the big picture, not an individual stock. The chart of AAPL stock is being used to illustrate the point.
- The power of The Arora Report support and resistance zones is evident from the chart, which shows that during the recent swoon, AAPL stock dipped to the low band of the support zone and then bounced. This support zone is not recent. It is a long standing support zone that was previously given to members of The Arora Report.
- The chart shows heavy volume when AAPL stock bounced from the low band of the support zone.
- RSI on the chart shows AAPL stock is neither overbought nor oversold.
- The chart shows a potential island reversal pattern in AAPL stock. This is a positive.
- The chart shows AAPL stock trading in the premarket today with a gap up. The reason for the gap up is President Trump granting Apple a temporary reprieve. The reprieve also includes other smart phones, laptops, servers, and certain semiconductors.
- The chart shows the prior gap. On Friday in the late evening when it was announced that the reciprocal tariffs would not apply to smartphones, the expectation of stock market bulls was that today AAPL stock would close the prior gap shown on the chart.
- On Friday’s announcement, stock market bulls were jubilant. Stock market bulls were proclaiming that today would see a massive stock market rally for the ages.
- Prudent investors should note that on Friday, AAPL stock moved more than the market.
- The administration is clearly extremely sharp. In The Arora Report analysis, they recognized the unintended consequences of the dollar falling and Treasury bonds falling when President Trump paused reciprocal tariffs. As a member of The Arora Report, you were ahead of the curve. We previously shared with you that the reason for the drop in the dollar was a perception among foreigners that President Trump had blinked, the U.S. was unreliable, and now foreign leaders would be tougher in negotiations with President Trump as they knew President Trump’s pain point.
- Over the weekend, there was a frenzy with a full court press, including a post from President Trump that the reprieve was temporary. President Trump will be reviewing the entire electronics supply chain. The administration took great pains to explain that this was not a reduction in tariffs but a reclassification. The tech products under review accounted for 23%, $100B, of U.S. imports from China last year. In 2024, 78% of computer monitors and 81% of smartphones were imported from China.
- AAPL stock is in the ZYX Buy Core Model Portfolio. AAPL stock is long from $4.68. AAPL is trading at $209.03 as of this writing in the premarket. This represents a gain of 4366%. Real gains are higher because most of the AAPL position has been hedged. Hedges became very profitable. A signal was recently given to take partial profits on hedges.
- As the trade war between the U.S. and China intensifies, China has suspended the export of rare earth minerals. Rare earth minerals are very important for the American economy. China dominates in rare earth minerals. MP Materials is a major American rare earth miner. MP is in the ZYX Buy Core Model Portfolio.
- As an actionable item, the sum total of the foregoing is in the protection band, which strikes the optimum balance between various crosscurrents. Please scroll down to see the protection band. The protection band is one of the large number of unique edges that are available to members of The Arora Report.
Magnificent Seven Money Flows
In the early trade, money flows are positive in Amazon (AMZN), Nvidia (NVDA), Microsoft (MSFT), Alphabet (GOOG), Meta (META), Tesla (TSLA), and Apple (AAPL).
In the early trade, money flows are positive in S&P 500 ETF (SPY) and Nasdaq 100 ETF (QQQ).
Momo Crowd And Smart Money In Stocks
The momo crowd is *** (To see the locked content, please take a 30 day free trial) stocks in the early trade. Smart money is *** in the early trade.
Note for new members: Smart money often sells into the strength generated by momo crowd buying and buys into the weakness generated by momo crowd selling. Over a long period of time, investors come out ahead by adopting smart money’s ways. The exception is in a raging bull market – for very short term trades, consider following the momo crowd and not smart money. Smart money is an important indicator but is only one of hundreds of indicators that go into determining the protection band and signals. Please click here and here to understand how signals are generated.
Very Very Short-Term Indicator
Our very, very short-term early stock market indicator is ***. This indicator, with a great track record, is popular among long term investors to stay in tune with the market and among short term traders to independently undertake quick trades.
Gold
The momo crowd is *** gold in the early trade. Smart money is *** in the early trade.
For longer-term, please see gold and silver ratings.
Oil
The momo crowd is *** oil in the early trade. Smart money is *** in the early trade.
For longer-term, please see oil ratings.
Bitcoin
Bitcoin (BTC.USD) is seeing aggressive buying.
Markets
Interest rates are ticking down, and bonds are ticking up.
The dollar is weaker.
Trading futures is not recommended for most investors. The purpose of providing this information is to give an indication of the premarket activity that usually guides the activity when the market opens.
S&P 500 futures are trading at 5468 as of this writing. S&P 500 futures resistance levels are 5500, 5622, and 5748 : support levels are 5400, 5256, and 5210.
DJIA futures are up 362 points.
Gold futures are at $3228.6, silver futures are at $32.12, and oil futures are at $62.33.
Protection Band And What To Do Now
It is important for investors to look ahead and not in the rearview mirror. The proprietary protection band from The Arora Report is very popular. The protection band puts all of the data, all of the indicators, all of the news, all of the crosscurrents, all of the models, and all of the analysis in an analytical framework that is easily actionable by investors.
Consider continuing to hold good, very long term, existing positions. Based on individual risk preference, consider holding *** in cash, Treasury bills, short term fixed income, or allocated to short-term tactical trades; and short to medium-term hedges of ***, and short term hedges of ***. 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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This post was just published on ZYX Buy Change Alert.
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Nigam Arora
Nigam Arora is known for his accurate stock market calls. Nigam is a distinguished master of the macro. He is a popular columnist with over 100 million page views, an engineer, and nuclear physicist by background. Nigam has founded two Inc. 500 fastest growing companies and has been involved in over 50 entrepreneurial ventures. He is the developer of Theory ZYX of Successful Change Management and is the author of the book on Theory ZYX, as well as the developer of the ZYX Change Method for Investing.
Dr. Natasha Arora
Dr. Natasha Arora has significant expertise in investment analysis especially biotech, healthcare, and technology. Natasha is a graduate of Harvard Medical School followed by a postdoc at MIT. She has published several peer reviewed research papers in top science journals.
