By Nigam Arora
To gain an edge, this is what you need to know today.
Important Tell For Stock Market
Please click here for a chart of leverage semiconductor ETF (SOXL).
Note the following:
- SOXL continues to be a tell for the entire stock market because semiconductors are the leading sector and super aggressive investors are focused on SOXL.
- The chart shows that in spite of blowout earnings from Sandisk (SNDK) and Western Digital (WDC), SOXL is slightly pulling back instead of breaking out. The reason is that on one side, blowout earnings and even higher projections should cause SOXL to break out; but on the other hand, SOXL is up 216% from the March 30 low, and prudent investors are wondering how much more is there to go.
- After the market close, Sandisk, maker of NAND memory, and Western Digital, a disk drive maker, reported blowout earnings significantly better than whisper numbers. Both stocks immediately saw aggressive selling in the after market after earnings were reported. Investors should consider watching these two stocks today to see if buying comes in and they go higher.
- Apple (AAPL) reported robust earnings crediting the “most popular ever” iPhone. Even without any material AI announcements, AAPL stock is higher as of this writing in the premarket. This indicates that if Apple comes with innovative AI announcements, AAPL stock has the potential to go up another $100. AAPL is in the ZYX Buy Core Model Portfolio, long from an average of $4.68. This represents a gain of 5899% for long time members. Apple’s new CEO John Ternus is a hardware engineer, and there are high hopes for a return to innovation like in the Steve Jobs era.
- As of this writing, aggressive buying is coming into the stock market on news that Iran has submitted a new proposal. Oil is falling on the news.
- Two oil majors Exxon (XOM) and Chevron (CVX) reported earnings better than whisper numbers. Of special interest to prudent investors is that both oil majors are resisting pressure from the Trump administration to increase production to lower oil prices.
- Yesterday, DJIA significantly outperformed other indexes primarily driven by only one stock Caterpillar (CAT). Caterpillar reported earnings much better than whisper numbers due to demand for power equipment for AI data centers. S&P 500 and Nasdaq 100 were held back by pension funds selling due to rebalancing.
- Blind money will flow into the stock market today and Monday. Blind money is the money that investors send to Wall Street at the beginning of the month without any analysis and without any consideration for market conditions.
- ISM Manufacturing Index will be released at 10am ET and may be market moving. The consensus is 53.1%.
- 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.
Europe
Speculation is building that the European Central Bank and the Bank of England will raise rates in their next meetings.
Taiwan
Taiwan’s Q1 GDP grew by a gigantic 13.7%. The last time such growth was seen was in 1987. The primary driver is AI semiconductors. Taiwan Semiconductor Manufacturing Company (TSM), based in Taiwan, manufactures advanced AI chips for Nvidia (NVDA) and CPUs for Apple.
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 Apple (AAPL), Microsoft (MSFT), Nvidia (NVDA), and Tesla (TSLA).
In the early trade, money flows are neutral in Alphabet (GOOG) and Meta (META).
In the early trade, money flows are negative in Amazon (AMZN).
In the early trade, money flows are neutral 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
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 seeing buying.
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 7258 as of this writing. S&P 500 futures resistance levels are 7500 and 7700 : support levels are 7200, 7000, and 6780.
DJIA futures are up 140 points.
Gold futures are at $4602, silver futures are at $74.75, and oil futures are at $103.70.
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.
