By Nigam Arora
To gain an edge, this is what you need to know today.
Lower Core CPI
Please click here for a chart of JPMorgan Chase stock (JPM).
Note the following:
- The Morning Capsule is about the big picture, not an individual stock. The chart of JPM stock is being used to illustrate the point. JPMorgan (JPM) has kicked off earnings season.
- The chart shows JPM stock did not enter zone 1 (resistance) on earnings. Immediately after reporting earnings, JPM stock spiked but then pulled back. Almost every quarter, JPM stock follows this pattern after earnings.
- The chart shows a steady rise in JPM stock since the April 2025 low.
- JPMorgan earnings are roughly inline with consensus and whisper numbers. Trading revenues were very strong. Investment banking revenues are less than consensus. JPM is long from an average of $34.14 and is in the ZYX Buy Core Model Portfolio. As of this writing, long time members of The Arora Report have a gain of 848%. JPM is trading at $323.49 as of this writing in the premarket.
- For those not in JPM stock, The Arora Report call is to buy JPM stock on a dip in the Arora buy zone.
- Also released this morning are important earnings from Delta Air Lines (DAL). Earnings are less than consensus and whisper numbers.
- Core Consumer Price Index (CPI) data came cooler than expected. Here are the details:
- Headline CPI came at 0.3% vs. 0.3% consensus.
- Core CPI came at 0.2% vs. 0.3% consensus.
- In the early trade, there has been aggressive buying in the stock market due to core CPI coming cooler than expected. As of this writing, S&P 500 futures have crossed above 7000.
- ADP data shows that the private sector added an average of 11,750 jobs per week over the four weeks ending December 20.
- A dichotomy has developed between the stock market and gold over the Powell investigation.
- The stock market is not concerned at this time about the Fed potentially losing its independence. In the stock market, there was a brief battle between the momo crowd and smart money. The momo crowd aggressively bought yesterday’s morning dip due to the Powell investigation. To the momo crowd, if the Fed loses its independence, it is a good thing because it will mean lower interest rates.
- The gold market is very concerned about the Fed potentially losing its independence. Investor behavior is very different in the gold market compared to the stock market. Investors are buying gold as an antidote to the potential loss of the Fed’s independence.
- President Trump is very focused on the affordability theme leading to the mid-term election.
- President Trump is urging support for the Credit Card Competition Act that would curb swipe fees.
- President Trump also aims to reduce soaring electricity prices due to AI data center demand. President Trump wants tech companies to pay the cost.
- Microsoft (MSFT) is announcing an initiative to offset the impact of AI data centers on local communities. Microsoft is announcing five core principles to achieve this goal.
- Of note is President Trump is imposing 25% tariffs on Iran’s business partners. Iran’s biggest business partner is China. China imports about 90% of Iran’s oil. Here is the key question: Will President Trump enforce this tariff on China and thereby increase friction with China, or will China be exempt, making this tariff meaningless?
- Supply chain shifts away from China continue. Google (GOOG, GOOGL) will develop and manufacture high end smartphones from scratch in Vietnam. ZYX Emerging has followed Vietnam continuously for 19 years. Vietnam ETF (VNM) is in the ZYX Emerging Model Portfolio.
- Results of the $22B 30-year Treasury bond auction will be announced at 1pm ET. If the auction is weak, it may be market moving.
- Bank of America (BAC), Citigroup (C), and Wells Fargo (WFC) will report earnings tomorrow in the premarket. BAC and C are in ZYX Buy.
- 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.
Japan
Japan is important because of its impact on the carry trade in the U.S.
Stocks in Japan hit a new high, but the yen weakened on confirmation that Takaichi plans for a snap election. Prudent investors should pay attention as this is significant. Right now, Takaichi has a razor thin majority. She hopes to gain a bigger majority to push through stimulus programs. Weakening yen is raising the specter of intervention by the Bank of Japan (BOJ).
Japan ETF (EWJ) and yen ETF (FXY) are in ZYX Allocation Model Portfolio.
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 Alphabet (GOOG), Nvidia (NVDA), and Tesla (TSLA).
In the early trade, money flows are neutral in Amazon (AMZN) and Meta (META).
In the early trade, money flows are negative in Apple (AAPL) and 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
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 range bound.
Markets
Interest rates are ticking down, and bonds are ticking up.
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.
S&P 500 futures are trading at 7021 as of this writing. S&P 500 futures resistance levels are 7200, 7500, and 7700 : support levels are 7000, 6780, and 6500.
DJIA futures are down 28 points.
Gold futures are at $4620, silver futures are at $87.74, and oil futures are at $60.46.
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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This post was just published on ZYX Buy Change Alert.
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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.
