By Nigam Arora
To gain an edge, this is what you need to know today.
Increased CPU Demand
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 the jump up in INTC stock on earnings in the after hours yesterday.
- RSI on the chart shows INTC has returned to overbought, but the stock has more room to run.
- Going into earnings, whisper numbers on Intel had moved up. Intel beat even those higher whisper numbers. Stocks move based on the difference between reported earnings and whisper numbers. Whisper numbers are the numbers analysts privately share with their best clients and are different from the numbers the same analysts publish for public consumption.
- Intel has just reclaimed, after 26 years, the high of $75.81 made in August 2000.
- In The Arora Report analysis, here is the most important point for prudent investors to know. As AI shifts to agentic AI, demand for CPUs will go even higher than the current high demand. The main reason behind Intel beating whisper numbers is high demand for CPUs for AI data centers. For AI training, demand for GPUs exploded, but demand for CPUs did not increase. Intel is not a major vendor of GPUs, and this is the reason INTC stock previously lagged.
- Is Intel the next Nvidia (NVDA)? Consider the following points:
- Nvidia is the major vendor of GPUs. Intel is a major vendor of CPUs.
- AI demand for GPUs is significantly higher than the demand for CPUs.
- No other company in the world comes even close to the capabilities of Nvidia GPUs. Intel has competition from Advanced Micro Devices (AMD) in CPUs. Some experts consider AMD CPUs to be better than Intel CPUs.
- Arm Holdings (ARM) is jumping into the business of making CPUs. Until now, Arm has simply been licensing its IP. Arm RISC architecture has major advantages over Intel’s CISC architecture. Arm is majority owned by Softbank (SFTBY) of Japan, and thus has the financial muscle to become a formidable competitor to Intel.
- For AI, Nvidia has a significant software moat that no other company comes close to. Intel does not have that advantage in AI.
- Nvidia does not manufacture its own chips, and thus is not distracted by issues related to manufacturing advanced AI chips. Taiwan Semiconductor (TSM) manufactures Nvidia’s chips. Intel has its own foundry. Intel just had a major event with Elon Musk’s Terafab deciding to use Intel’s 14A process. However, Intel’s 14A process is not mature and TSM is more advanced in semiconductor manufacturing processes.
- Nvidia is overowned. This is the reason that in spite of improving fundamentals, NVDA stock has had difficulty moving up at the same speed as other semiconductor stocks. When a stock is overowned, not many buyers are left to buy, even on good news, unless the stock breaks out. In contrast, Intel is underowned and thus has a significant pool of buyers who can step in to buy INTC stock.
- Most analysts already rate NVDA stock as a buy. The followers of these analysts have already bought NVDA stock. Until yesterday, most analysts did not have a buy rating on INTC stock. Now, as analysts rush to upgrade INTC, their followers will buy INTC stock.
- The momo crowd has just discovered INTC stock. The momo crowd does not do any deep analysis. The momo crowd primarily buys a stock because it is going up. When the momo crowd’s own buying moves a stock higher, it strengthens the momo crowd’s behavior and thinking they are geniuses, they buy more of the same stock. This momo crowd behavior can run a stock much higher than fundamentals justify or any prudent investor would think.
- NVDA is in the ZYX Buy Core Model Portfolio, long from an average of $12.55. As of this writing in the premarket, members of The Arora Report have a gain of 1498%. INTC is in ZYX Buy in the portfolio that surrounds the Core Model Portfolio, long from an average of $19.05. As of this writing in the premarket, members of The Arora Report have a gain of 348%.
- The U.S. government bought INTC stock at $20.47, and now has a paper gain of over $37B.
- There is optimism about an Iran deal for the following reasons:
- There are reports that Iran may have only two to five days of oil storage capacity left. This is going to force Iran’s hand to give concessions and strike a deal with the U.S.
- Iran’s power struggle has resolved in favor of a hardliner stance. Paradoxically, with a unified Iran, this increases the probability of a deal.
- Iran’s foreign minister is going to visit Pakistan.
- University of Michigan consumer sentiment will be released at 10am ET and may be market moving. As a reminder, University of Michigan data previously showed consumer sentiment hit a 74 year low. Unless consumer sentiment starts rising, consumer sentiment is a red flag on the other side of the stock market momo crowd’s giddiness.
- Prudent investors need to look ahead. Pension funds and some other institutions will be doing month end rebalancing. In The Arora Report analysis, rebalancing will involve selling tens of billions of dollars of stocks.
- 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 Amazon (AMZN), Nvidia (NVDA), Microsoft (MSFT), Alphabet (GOOG), Meta (META), and Tesla (TSLA).
In the early trade, money flows are negative in Apple (AAPL).
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 ***. Today is a Friday. Fridays tend to have short squeezes, putting additional upward pressure on the market. 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 *** in 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 range bound.
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 7168 as of this writing. S&P 500 futures resistance levels are 7200, 7500, and 7700 : support levels are 7000, 6780, and 6600.
DJIA futures are down 60 points.
Gold futures are at $4720, silver futures are at $75.86, and oil futures are at $95.68.
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.
To take a free 30-day trial to paid services to gain access to more opportunities, please click here.
This post was just published on ZYX Buy Change Alert.
Markets can generate substantial wealth for knowledgeable investors. NOW YOU TOO CAN ALSO SPECTACULARLY SUCCEED AT MEETING YOUR GOALS WITH THE HELP OF THE ARORA REPORT. You are receiving less than 1% of the content from our paid services. …TO RECEIVE REMAINING 99%, INCLUDING MANY ATTRACTIVE INVESTMENT OPPORTUNITIES AND SIGNALS IN REAL TIME, TAKE A FREE
TRIAL TO PAID SERVICES.
The Arora Report is one of the only major global investment newsletters that does not employ a single salesperson—because it does not need to. While competitors rely on high-pressure sales tactics, The Arora Report grows purely through results, with satisfied members recommending it to their family and friends.
Join the service that investors trust the most and recommend to family and friends.
Please click here to take advantage of a FREE 30 day trial.
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.
