By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
iPhone Ban Expanded
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 because AAPL stock is having a disproportionate impact on the stock market.
- The chart shows the initial drop in AAPL stock on China banning iPhone use by government workers. Please see yesterday’s Afternoon Capsule and individual signals on Apple in ZYX Buy.
- The chart shows AAPL stock falling farther as China expands the iPhone ban to other agencies and state owned enterprises.
- The chart shows that AAPL stock has fallen in the support zone as of this writing.
- The chart shows that AAPL stock previously touched the low band of the support zone subsequent to breaking the trendline and then bounced.
- The chart shows that unless there is a rally, AAPL stock will have made a lower high on the bounce. From a technical perspective, this is a negative.
- The chart shows the Arora Buy Zone last year. AAPL dipped in the Arora Buy Zone last year, allowing members of The Arora Report to buy AAPL stock near the lows and then ride the big rally.
- As a full disclosure, long time subscribers of The Arora Report own AAPL stock from an average of $4.68. New signals have been given in ZYX Buy.
- The iPhone 15 launch is ahead. Historically, the stock goes up into a new iPhone launch and then pulls back after the launch.
- There is excitement about Apple potentially launching Siri 2.0. Siri 2.0 reportedly incorporates the latest advances in AI. It is no secret that Siri has fallen behind similar offerings from Alphabet (GOOG, GOOGL), Amazon (AMZN), and Samsung (SSNLF).
- The Arora Report has been sharing with you the China risk in AAPL stock for a while. Now, investors are waking up to it.
- There is also China risk to companies such as Tesla (TSLA), Nike (NKE), and Starbucks (SBUX), but so far, investors are oblivious.
- Jobless claims came at 216K vs. 233K consensus. This data indicates that overall the job picture is remaining very strong. For blue collar workers, the job picture is improving, but it is deteriorating for certain white collar workers, especially in IT. Jobless claims is a leading indicator and carries heavy weight in our adaptive ZYX Asset Allocation Model with inputs in ten categories. In plain English, adaptiveness means that the model changes itself with market conditions. Please click here to see how this is achieved. One of the reasons behind The Arora Report’s unrivaled performance in both bull and bear markets is the adaptiveness of the model. Most models on Wall Street are static. They work for a while and then stop working when market conditions change.
- A great hope is that artificial intelligence will increase productivity. For the time being, Q2 Productivity-Revised came at 3.5% vs. 3.7% consensus. This indicates that productivity is not rising as fast as expected.
- 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 negative in Amazon (AMZN), Nvidia (NVDA), Microsoft (MSFT), Alphabet (GOOG), Meta (META), Tesla (TSLA), and Apple (AAPL).
In the early trade, money flows are negative 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 *** stocks in the early trade.
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.
API crude inventories came at a draw of 5.521M barrels vs. a consensus of a draw of 1.429M barrels.
The momo crowd is *** oil in the early trade. Smart money is *** in the early trade.
For longer-term, please see oil ratings.
Bitcoin (BTC.USD) is range bound.
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 stronger.
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 $1946, silver futures are at $23.28, and oil futures are at $87.04.
S&P 500 futures are trading at 4437 as of this writing. S&P 500 futures resistance levels are 4460, 4600, and 4713: support levels are 4400, 4318, and 4200.
DJIA futures are down 90 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 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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