By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
Threat To Tech
Please click here for a chart of Intel stock (INTC).
Note the following:
- The Morning Capsule is about the big picture, not an individual stock. The chart of INTC stock is being used to illustrate the point.
- The chart shows Intel stock ran up on AI excitement.
- The chart shows a double top. We previously shared with you that this is a negative technical pattern.
- The chart shows a gap down on earnings. Since earnings, Intel has received about $20B in U.S. government grants and low cost loans. Intel is the largest gainer from the Chips and Science Act, a law that Biden touts as his major achievement.
- The chart shows that the big government grants failed to lift INTC stock much higher.
- The chart shows the support zone.
- The chart shows that in the premarket, INTC stock is falling below the support zone shown on the chart on China news. If the break is sustained, the support zone on the chart will become a resistance zone.
- The Arora Report has been sharing with you the China risk for many popular stocks. China is banning microprocessors from Intel and AMD (AMD) in government computers. The Chinese government is also excluding Windows operating systems from government computers.
- 27% of Intel’s $54B in sales is from China.
- 15% of AMD’s $23B in sales is from China.
- Only about 1.5% of Microsoft’s (MSFT) sales are from China.
- The foregoing illustrates the risk to Apple (AAPL) from China. About 20% of Apple’s sales are from China. We are receiving requests for a podcast on Apple due to the China risk and the antitrust lawsuit. If you are interested in an in-depth podcast on risks to Apple, please write to ambassador@thearorareport.com.
- In a major development, Apple (AAPL), Meta (META), and Alphabet (GOOG, GOOGL) are under full E.U. probe under the new Digital Markets Act.
- Unlike many probes, this probe has a huge risk as the fines can be up to 10% of global revenues.
- These stocks are still holding up as the momo crowd is a big buyer at these prices, and the momo crowd does not do much analysis.
- In a surprise move, an influential member of the Fed, Atlanta Federal Reserve Bank President Raphel Bostic said that now he expects only one quarter point rate cut this year. Previously, Bostic had projected two rate cuts.
- The stock market is positioned for three rate cuts.
- We have previously shared with you The Arora Report analysis that bringing inflation down to 3% was easy, but bringing inflation down from 3% to 2% may prove to be difficult. Now, Bostic is saying that he is less confident that inflation will continue to fall towards 2%.
- 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.
Magnificent Seven Money Flows
In the early trade, money flows are neutral in Nvidia (NVDA).
In the early trade, money flows are negative in Amazon (AMZN), Tesla (TSLA), MSFT, GOOG, META, and AAPL.
In the early trade, money flows are neutral in S&P 500 ETF (SPY) and positive 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 *** stocks in the early trade.
Gold
The momo crowd is *** gold in the early trade. Smart money is *** gold 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 on weekend pump about bitcoin halving. For next level information, listen to the podcast titled “Bitcoin Halving – Six Secrets Whales Do Not Want You To Know.”
Markets
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.
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.
Gold futures are at $2176, silver futures are at $24.91, and oil futures are at $81.03.
S&P 500 futures are trading at 5277 as of this writing. S&P 500 futures resistance levels are 5400, and 5500: support levels are 5256, 5210, and 5020.
DJIA futures are down 58 points.
Protection Band 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 seven 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.
