By Nigam Arora
To gain an edge, this is what you need to know today.
Investors Get Jittery
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. JPM is the largest U.S. bank.
- The chart shows the momo crowd was buying JPM stock on hopium ahead of earnings.
- The chart shows when JPM reported earnings.
- The chart shows the big drop in JPM stock on the earnings report. Whisper numbers were running ahead of consensus numbers. The drop in JPM stock was due to JPM missing earnings. Here are the details:
- JPM reported Q3 adjusted EPS of $5.75 vs. $5.94 consensus.
- JPM reported revenues of $50.17B vs. $51.22B consensus.
- The chart shows a reversal in JPM stock. The reversal was due to investors focusing on net interest income (NII) guidance. Here are the details:
- JPM sees Q4 NII of $28.0B vs. $27.42B consensus.
- For FY27, JPM sees NII of $107B, approximately 10% growth, vs. 2026.
- The VUD indicator is the most sensitive measure of net supply and demand in real time. The orange represents net supply and the green represents net demand.
- VUD indicator on the chart is orange, indicating net supply of JPM stock.
- The first big drop in JPM and then the recovery illustrates how jittery investors are.
- As a full disclosure, JPM is in the ZYX Buy Core Model Portfolio. It is long from an average of $34.14. JPM is trading at $338.57 as of this writing in the premarket, representing a 892% gain.
- As a member of The Arora Report, you have been ahead of the curve on future competition from China in semiconductor memory. We have been writing about it for months. Yesterday morning we highlighted the new progress by a Chinese memory manufacturer to make denser memory with a new technology. In the U.S., smart money trimmed Micron stock (MU) on the development, but the momo crowd, oblivious to the news, bought MU stock.
- At a time when the momo crowd in the U.S. has been oblivious, investors in South Korea were paying attention to the development in China. Kospi index fell intraday as much as 7.4% and closed down 5.46%. Two big memory manufacturers in South Korea are Samsung (SSNLF) and SK Hynix (SKHY). Samsung stock in South Korea fell 7.4%, and SK Hynix stock fell 10.1%.
- Prudent investors should pay close attention to what Broadcom (AVGO) CEO Hock Tan said at a conference in Singapore. Here are the details:
- Tan warned that many AI investors (the momo crowd) “have no clue what they are investing in” and have “very extreme expectations.” Tan compared their behavior to gambling in a casino.
- Tan also questioned the return on investment from corporate AI spending, pointing out that many companies are experimenting with AI without generating meaningful productivity gains.
- He acknowledged that OpenAI and Anthropic are generating substantial revenues but cautioned that heavy spending on training makes their long term profitability uncertain.
- Tan sees capital, rather than chips or memory, becoming the biggest constraint on AI growth.
- In The Arora Report analysis, coming from the CEO of one of the biggest beneficiaries of the AI boom, these comments deserve attention.
- At this time, when investors are growing jittery, reacting emotionally, and getting whipsawed, as a member of The Arora Report you have a great tool to stay disciplined in the Arora Protection Band.
- Consumer Price Index (CPI) will be released tomorrow at 8:30am ET, followed by Producer Price Index (PPI) Thursday at 8:30am ET.
- 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 Apple (AAPL), Alphabet (GOOG), and Microsoft (MSFT).
In the early trade, money flows are neutral in Amazon (AMZN).
In the early trade, money flows are negative in Meta (META), Nvidia (NVDA), and Tesla (TSLA).
In the early trade, money flows are mixed in S&P 500 ETF (SPY) and negative in 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. 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 are ticking down, and bonds are ticking up.
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 7850 as of this writing. S&P 500 futures resistance levels are 7900 and 8000 : support levels are 7831, 7795, and 7733.
DJIA futures are up 455 points.
Gold futures are at $4201, silver futures are at $60.20, and oil futures are at $93.10.
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.
