By Nigam Arora
To gain an edge, this is what you need to know today.
Victory For Google And 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 chart shows the jump in AAPL stock this morning.
- The chart shows AAPL stock gapped up above the top band of zone 1 (prior resistance).
- RSI on the chart shows AAPL is overbought. Overbought stocks are susceptible to a pullback.
- AAPL stock has jumped up on the news that a federal judge ruled Google (GOOG, GOOGL) can continue paying Apple for Google Search to be the Safari default search engine. In recent years, Google has paid Apple $15B – $20B to be the search default.
- In The Arora Report analysis, the Google ruling is the best case scenario that could have happened for Apple. The ruling included restrictions such as Google must syndicate to qualified competitors and deals must be renegotiated every year. This may provide Apple with more leverage around search engines. It may also open the door for Google Search competitors, including those that are AI-enabled, to partner with Apple.
- In The Arora Report analysis, the Google ruling is positive for Alphabet as the overhang is removed. The removal of the overhang will allow Google to reach a higher PE. However, in The Arora Report analysis, the ruling is not as positive for Google as investors are generally believing. The reason is Google is now required to open its search data to competitors. In the middle of euphoria about Google, think about it logically – Google has had over 90% of the market share in search. AI chat bots are already changing search habits. Now, alternatives to Google Search like ChatGPT will be able to strengthen their results with the search data that Google is being forced to open up.
- We shared with you in yesterday’s Morning Capsule:
The world witnessed pictures of China’s President Xi, India’s Prime Minister Modi, and Russia’s President Putin expressing unity to establish a new world order.
- China is continuing to show the new world order it is trying to establish. China’s President Xi, Russia’s President Putin, and North Korea’s leader Kim attended a military parade in China marking the end of World War II with the latest combat drones, nuclear capable ballistic missiles, and anti-ship missiles on display. This is the first time Xi, Putin, and Kim have appeared in public together. Putin said the relationship with China is at “an unprecedentedly high level.” Xi called Putin “an old friend” and called China “unstoppable.”
- In response to the historical display, President Trump posted on social media that Xi, Putin, and Kim are conspiring against the U.S.
- In The Arora Report analysis, all in all, the events in China are negative for the U.S. markets in the long term and positive for markets in China and India.
- IPO euphoria has taken hold among investors. This euphoria will be tested today when one of the hottest recent IPO’s Figma (FIG) reports earnings. Figma earnings will also be a test for software stocks. The consensus is for Figma to report revenue of $250M and earnings of $0.09.
- In a noteworthy development, Salesforce (CRM) has replaced 4,000 customer service employees with AI.
- JOLTS job openings will be released at 10am ET and may be market moving.
- The Fed’s Beige Book will be released at 2pm ET.
- 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
In the early trade, money flows are positive in Apple (AAPL), Alphabet (GOOG), Meta (META), Nvidia (NVDA), and Tesla (TSLA).
In the early trade, money flows are neutral in Amazon (AMZN).
In the early trade, money flows are negative in Microsoft (MSFT).
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 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
Gold futures have crossed $3600.
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 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 6446 as of this writing. S&P 500 futures resistance levels are 6500, 6700, and 7000: support levels are 6256, 6131, 6017.
DJIA futures are down 89 points.
Gold futures are at $3616, silver futures are at $41.80, and oil futures are at $64.44.
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.
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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.
