By Nigam Arora
To gain an edge, this is what you need to know today.
Investor Traps
Please click here for a chart of Applied Materials stock (AMAT).
Note the following:
- The Morning Capsule is about the big picture, not an individual stock. The chart of AMAT stock is being used to illustrate the point. Applied Materials is one of the largest semiconductor manufacturing equipment manufacturers in the world and is critical to the AI revolution.
- The chart shows AMAT stock is falling after earnings.
- The chart shows the AMAT stock has fallen 32% from its high earlier this year.
- Applied Materials reported earnings better than consensus but below whisper numbers. Here are the details:
- Applied Materials reported EPS of $3.50 vs. $3.39 consensus.
- Applied Materials reported revenue of $9.12B vs. $9B consensus.
- Applied Materials projects Q4 EPS of $4.02 ± $0.20 vs. $3.68 consensus.
- Applied Materials projects Q4 revenue of $10.25B ± $500M vs. $9.54B consensus.
- The reason AMAT is falling in spite of outstanding earnings is that earnings are below whisper numbers. Stocks move based on whisper numbers. Whisper numbers are the numbers analysts privately share with their best clients. Whisper numbers are often different from consensus numbers published by the same analysts for public consumption.
- In The Arora Report analysis, Applied Materials business, accomplishments, and growth prospects are better now than they were when the stock was trading 32% higher. AMAT stock move and earnings expose a set of traps that are constantly set for gullible investors these days.
- Investing based on published consensus numbers is a trap.
- Investing based on a typical Wall Street call is a trap.
- Investing based on traditional fundamental analysis is a trap.
- Investing based on traditional technical analysis is a trap.
- Here is what works these days:
- Segmented money flows including smart money flows and momo crowd flows
- Trajectory of whisper numbers
- Sentiment
- Innovative proprietary technical indicators
- Highly specialized market intelligence
- Forward looking analysis starting with the big picture
- Getting in core positions early
- Holding core positions through volatility
- Trade around positions to make tactical moves
- The knowledge of positioning
- As a member of The Arora Report, you are already ahead of the curve in following what works and avoiding the traps. Please click here to see how the unique ZYX Change Method with six screens gives you a big edge. The core AMAT position in The Arora Report Core Model Portfolio in ZYX Buy is long from an average of $16. Even after a 32% pullback, there is a gain of 4523%.
The Big Money Is Made by Identifying Change Before the Crowd
AMAT is not a hypothetical example or a backtest. It is an actual example of what the ZYX Change Method is designed to do — identify important change before the crowd and then manage the position as conditions change.
The next great opportunity will not announce itself in advance. The objective is to identify it before it becomes obvious to everyone else.
START SEEING WHAT PAID MEMBERS SEE — 30 DAYS FREE
- Prudent investors closely watch retail sales data as the U.S. economy is 70% consumer based. Retail sales are a bust. Here is the latest retail sales data.
- July headline retail sales came at -0.6% vs. 0.2% consensus.
- July retail sales ex-auto came at -0.3% vs. 0.2% consensus.
- Retail sales data will likely cause economists to revise GDP forecasts.
- In the early trade, the momo crowd is oblivious to the retail sale bust, but prudent investors should pay attention. Here is the key question – will the stock market pay attention? The momo crowd will likely not pay attention, so it will come down to smart money.
- University of Michigan consumer sentiment will be released at 10am ET and may be market moving.
- As an actionable item, the sum total of the foregoing is in the Arora Protection Band, which strikes the optimum balance between various crosscurrents. Please scroll down to see the Arora Protection Band. The Arora Protection Band is one of the large number of unique edges that are available to members of The Arora Report.
Magnificent Seven Money Flows
Most portfolios are now heavily concentrated in the Mag 7 stocks. For this reason, to get ahead and get an edge, investors need to dig below the surface of the Mag 7 stocks. It is equally important to rise above the noise of daily news on the Mag 7 stocks. The best way to get an edge, dig below the surface, and rise above the noise of the daily news is to pay attention to early money flows in the Mag 7 stocks on a daily basis. When there is significant news in the Mag 7 stocks that rises above the threshold of noise and impacts your entire portfolio, it is covered in the main section above.
In the early trade, money flows are positive in Nvidia (NVDA) and Tesla (TSLA).
In the early trade, money flows are neutral in Amazon (AMZN), Microsoft (MSFT), Alphabet (GOOG), Meta (META), and Apple (AAPL).
In the early trade, money flows are positive in S&P 500 ETF (SPY) and Nasdaq 100 ETF (QQQ).
What Is Smart Money Doing Right Now?
The answer is available to paid members. Knowing the news is not enough. An important edge comes from knowing how smart money is reacting to the news — before that reaction becomes obvious in the price.
UNLOCK TODAY’S SMART MONEY FLOWS — START 30 DAYS FREE
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 Arora Protection Band and signals. Please click here and here to understand how signals are generated.
Very Very Short-Term Indicator
The Arora Report’s proprietary 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. This is reflected in gold ETF (GLD), silver ETF (SLV), gold miner ETF (GDX), and silver miner ETF (SIL). 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 selling.
Markets
Interest rates and bonds are range bound.
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 7830 as of this writing. S&P 500 futures resistance levels are 7900 and 8000 : support levels are 7700, 7318, and 7194.
DJIA futures are down 98 points.
Gold futures are at $4400, silver futures are at $65.21, and oil futures are at $81.24.
Arora Protection Band And What To Do Now
It is important for investors to look ahead and not in the rearview mirror. The proprietary Arora Protection Band from The Arora Report is very popular. The Arora 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.
You Have Just Seen the Public Version. Paid Members Get the Actionable Version.
There is no shortage of financial news. The advantage does not come from simply knowing that Applied Materials reported earnings, retail sales disappointed, or the stock market moved.
The advantage comes from knowing what matters, detecting change before the crowd, understanding what smart money is doing, and knowing what action to take.
That is what The Arora Report is built to do.
This public Morning Capsule gives you less than 1% of what is available in the paid services. Paid members receive the signals, positioning, Smart Money flows, Arora Protection Band, attractive opportunities and real-time guidance that turn analysis into action.
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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.
