By Nigam Arora & Dr. Natasha Arora
Editor’s Note:
This is the Afternoon Capsule that was provided before PPI was released. PPI was released this morning. For analysis of the just released PPI data, please see the Morning Capsule that is available to paying subscribers. The Morning Capsule is issued every morning before the market open.
To gain an edge, this is what you need to know now.
Treacherous Road Ahead
Please click here for a chart of Advanced Micro Devices (AMD).
Note the following:
- The Capsules are about the big picture and not an individual stock. The chart of AMD is being used to illustrate the point that is important for the big picture.
- AMD has been running up in anticipation of AMD introducing a new AI ecosystem for generative AI.
- The chart shows that AMD stock closed yesterday from regular hours at $129.12.
- The chart shows AMD stock ran up to $132.74 in the premarket today and fell to $122.45 before some recovery. Why did AMD fall from its high when the stock market is strong and aggressive buying is occurring in AI stocks? The reason is that AMD announced its ecosystem for generative AI.
- AMD revealed details of a new Instinct MA300 Series accelerator family. AMD is calling its MI300X accelerator the most advanced accelerator for generative AI in the world.
- AMD also announced 4th Gen Epyc processor family for solutions to cloud computing.
- AMD is enhancing its relationship with AWS from Amazon (AMZN) with new 4th Gen Epyc processors.
- AMD also announced Ryzen PRO 7040 Series Mobile processors.
- AMD stock experienced a ‘buy the rumors and sell the news reaction.’
- A price action similar to AMD stock is shaping up in Oracle (ORCL) stock. Oracle announced earnings yesterday after the close. Oracle aggressively hyped AI in its earnings and its conference call. The momo crowd aggressively bought the stock ahead of and after earnings. Oracle stock has now reversed on a sell the news reaction.
- We have been sharing with you that a fortune is to be made in artificial intelligence in the next seven years, but at times, it will be treacherous. You need expert guidance. The forgoing shows how treacherous it can be. Many retail investors were going all in on AMD stock in the premarket buying it around $133. Now they are sitting on losses as they have no risk controls such as position size and diversification.
- There is a high probability of similar reversals in many AI stocks.
- In the Morning Capsule we shared with you CPI data came mostly as expected, indicating that there is more work for the Fed to do. Please read the Morning Capsule for details.
- In the Morning Capsule, we also wrote:
The momo crowd is aggressively buying AI stocks on the release of CPI data.
- Investors are waiting for key events tomorrow:
- PPI data is set to be released at 8:30am ET.
- The FOMC rate decision will be announced at 2pm ET.
- Powell is giving a press conference at 2:30pm ET.
- The momo crowd is buying stocks ahead of the Fed announcement. This is inline with the momo crowd’s strategy to buy stocks ahead of key events.
- In Monday’s Morning Capsule, we shared with you that the stock market met one of two definitions of a bull market. The stock market rose 20% above the low.
- The potential of a new bull market combined with slowing inflation from the CPI data is causing many investors to have FOMO (fear of missing out). FOMO is bringing in more buying.
- There was a Treasury Auction today. The results were good. Here are the results:
- $18B 30-year Treasury bond reopening
- High yield: 3.908% (When-Issued: 3.919%)
- Bid-to-cover: 2.52
- Indirect bid: 72.9%
- Direct bid: 18.1%
- To learn how to interpret Treasury auctions, listen to the podcast titled “Treasury Auction Data: Ignore The Most Popular.”
- The VUD indicator is the most sensitive measure of net supply demand in real-time. The orange represents net supply and the green represents net demand.
- Of special interest is the VUD indicator on the chart of QQQ (not shown) is orange indicating net supply of stocks at a time when momo crowd is aggressively buying AI stocks. Orange VUD indicator on QQQ indicates that some institutions are selling into the strength generated by momo crowd buying.
Potential After Hour Signals
Signals may be given after hours based on the news that will be released after hours. The best trades often occur outside regular hours. The reason is that almost all earnings are outside regular hours.
Buy signals will be in ZYX Buy. Short signals will be in ZYX Short.
There are no companies reporting earnings after hours today where a signal may be given.
Money Flows
The momo crowd money flows since the Morning Capsule are 🔒 (To see the locked content, please take a 30 day free trial).
Smart money flows since the Morning Capsule are 🔒.
Short squeeze money flows are 🔒.
A Special Note To New Subscribers
Note the smart money behavior. Smart money tends to sell into strength on strong up days.
New subscribers should consider adopting smart money’s way of investing and trading.
Sentiment
Sentiment is 🔒.
Sentiment is a contrary indicator at extremes. In plain English, this means that when sentiment becomes extremely positive it is time to sell and when sentiment becomes extremely negative it is time to buy.
Close
Orders on close appear to be matched.
There is merit to watching the pattern of market on close orders as they represent the day’s dominant net cumulative activity by many professionals and funds.
Gold
The momo crowd money flows in gold are 🔒 since the Morning Capsule.
Smart money flows are 🔒 in gold since the Morning Capsule.
Oil
The momo crowd money flows in oil are 🔒 since the Morning Capsule.
Smart money flows in oil are 🔒 since the Morning Capsule.
Buy Zones And Buy Now Ratings
🔒
Nibbling
🔒
This post was published yesterday in The Arora Report paid services. Since then the Morning Capsule has had an update in the paid services.
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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.
