By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
Artificial Intelligence Inflection
Please click here for a chart of Nvidia stock (NVDA).
Note the following:
- The Morning Capsule is about the big picture and not an individual stock. The chart of NVDA is being used to illustrate the macro picture.
- NVDA is the most important artificial intelligence stock.
- NVDA stock has the fourth largest weight in the Nasdaq 100.
- The chart shows that not long ago NVDA was in the Arora Buy Zone.
- NVDA is in the ZYX Buy Model Portfolio.
- The chart shows the very strong up move in NVDA stock from the buy zone.
- The chart shows a strong move up in NVDA stock when earnings were released after the market closed yesterday.
- NVDA reported earnings of $0.88 vs. $0.81 consensus.
- NVDA reported revenue of $6.05B vs. $6.01B consensus.
- NVDA is projecting Q1 revenue of $6.5B ± 2% vs. $6.3B consensus.
- The most important takeaway from the NVDA conference call and earnings is that an inflection point has been reached in artificial intelligence.
- CEO of NVDA, Jensen Huang said, “AI is at an inflection point, setting up for broad adoption reaching into every industry…From startups to major enterprises, we are seeing accelerated interest in the versatility and capabilities of generative AI. We are set to help customers take advantage of breakthroughs in generative AI and large language models. Our new AI supercomputer, with H100 and its Transformer Engine and Quantum-2 networking fabric, is in full production. Gaming is recovering from the post-pandemic downturn, with gamers enthusiastically embracing the new Ada architecture GPUs with AI neural rendering,”
- NVDA said, “Customers will be able to engage each layer of NVIDIA AI – the AI supercomputer, acceleration libraries software or pretrained generative AI models – as a cloud service. Using their browser, they will be able to engage an NVIDIA DGX(TM) AI supercomputer through the NVIDIA DGX Cloud, which is already offered on Oracle Cloud Infrastructure, with Microsoft Azure, Google Cloud Platform and others expected soon. At the AI platform software layer, they will be able to access NVIDIA AI Enterprise for training and deploying large language models or other AI workloads. And at the AI-model-as-a-service layer, NVIDIA will offer its NeMo and BioNeMo customizable AI models to enterprise customers who want to build proprietary generative AI models and services for their businesses. Further details will be shared at the company’s GTC developer conference, taking place virtually March 20-23.”
- The golden age of artificial intelligence is upon us. Over the next several years, prudent investors will make a fortune from artificial intelligence while many in the momo crowd will lose their shirts. For investors wanting next-level knowledge, listen to the podcasts “ChatGPT: Potentially The Most Important Breakthrough Since The iPhone” and “Full Frontal Assault: ChatGPT Vs. Bard.”
- Buying on excitement over artificial intelligence is meeting selling on strong economic data.
- Q4 GDP Deflator – Second Estimate came at 3.9% vs. 3.5% consensus.
- Q4 GDP Second Estimate came at 2.7% vs. 2.9% consensus.
- Initial jobless claims came at 192K vs. 200K consensus.
- Atlanta Fed President Bostic will speak at 10:50am ET. San Francisco Fed’s Daly will speak at 2pm ET. Both can potentially move the markets.
- As an actionable item to navigate both the bullish and bearish cross currents, pay attention to the protection band.
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.
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 is range bound.
Markets
Our very, very short-term early stock market indicator is 🔒 but expect the market to open 🔒 on artificial intelligence excitement. 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.
Interest rates are ticking up, and bonds are ticking down.
The dollar is mixed.
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.
Gold futures are at $1830, silver futures are at $21.55, and oil futures are at $74.90.
S&P 500 futures are trading at 4017 as of this writing. S&P 500 futures resistance levels are 4200, 4318, and 4400: support levels are 4000, 3950, and 3860.
DJIA futures are up 93 points.
Protection Bands And What To Do Now
It is important for investors to look ahead and not in the rearview mirror.
Consider continuing to hold good, very long term, existing positions. Based on individual risk preference, consider holding 🔒 in cash or treasury bills 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.
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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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.
