By Nigam Arora
To gain an edge, this is what you need to know today.
Important Earnings Ahead
Please click here for a chart of S&P 500 ETF (SPY) which represents the benchmark stock market index S&P 500 (SPX).
Note the following:
- The chart shows that the stock market is bouncing from the earlier loss.
- On Sunday evening, significant selling came into stock futures on rising oil prices and falling bonds.
- This morning, oil started falling and bonds started rising on unconfirmed reports from Iran that the U.S. is offering a temporary waiver on oil sanctions. As oil fell and bonds rebounded, significant buying came into stock futures. As of this writing, there is another unconfirmed report that Iran has agreed to a long term nuclear freeze and conditional transfer of uranium to Russia. This report is bringing in more buying, especially in semiconductor stocks.
- Investors should keep a close eye on statements from President Trump regarding Iran. The stock market believes that President Trump is trying hard to find a way to declare victory and extract the U.S. from the Iran war. The road block is that Iran is not agreeing to open the Strait of Hormuz unless the U.S. gives significant concessions. In The Arora Report analysis, the real issue stopping an agreement with Iran is that both President Trump and Iran want to declare victory but neither one wants the other to sound victorious.
- The bond market is now discounting a 52% probability of a rate hike in 2026. Only a week ago, prior to hot Producer Price Index and Consumer Price Index, the probability of a rate hike in 2026 was only 24%.
- Dual mania of extremely aggressive buying of semiconductors and call options by the momo crowd continues. In The Arora Report analysis, the dual mania will collide with important earnings ahead.
- Nvidia (NVDA) will report earnings on Wednesday after the close. NVDA stock has moved higher going into earnings. Whisper numbers are higher than the consensus. Stocks move based on the difference between whisper numbers and reported numbers. Whisper numbers are the numbers analysts share with their best clients and are different from the numbers the same analysts publish for public consumption. In three of the last four quarters, NVDA stock fell after earnings because earnings were above consensus but below whisper numbers.
- Important retail earnings are ahead from Lowe’s (LOW), Home Depot (HD), Walmart (WMT), and Target (TGT). Walmart earnings are most important as Walmart stock has done well, but it is very expensive, trading at 43 times forward PE. WMT is in the ZYX Buy Core Model Portfolio long from an average of $19.25. WMT stock is trading at $131.55 as of this writing in the premarket, representing a gain of 583%. LOW is also in the ZYX Buy Core Model Portfolio and is near the buy zone as of this writing in the premarket.
- Due to the K-shaped economy in which lower and middle income people are hurting, there is significant concern about retailers. In The Arora Report analysis, the last quarter was likely fine because tax payers received 18% more in refunds compared to the previous year due to the One Big Beautiful Bill Act. Historical data shows that most consumers spend their tax refunds. However projections for this quarter and the rest of the year are a real concern.
- 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.
China
China is important because it is the world’s second largest economy. China’s economy is weakening.
- Retail sales for April were up 0.2% year-over-year vs. 2.0% consensus.
- Industrial output was up 4.1% year-over-year vs. 5.9% consensus.
Japan
Japan is important because in the carry trade funds have borrowed hundreds of billions of dollars in Japan and invested in the U.S., primarily in the AI trade. Earlier today, the yield on 10 year Japanese Government Bonds rose to 2.8%, the highest level in 29 years.
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 Nvidia (NVDA).
In the early trade, money flows are negative in Amazon (AMZN), Microsoft (MSFT), Alphabet (GOOG), Meta (META), Tesla (TSLA), and Apple (AAPL).
In the early trade, money flows are mixed 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. 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 *** in oil in the early trade. Smart money is *** in the early trade.
For longer-term, please see oil ratings.
Bitcoin
Bitcoin Depot (BTM) is the largest operator of bitcoin (BTC.USD) ATMs in North America. Bitcoin Depot has filed for bankruptcy blaming regulations.
Bitcoin 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 7417 as of this writing. S&P 500 futures resistance levels are 7500, 7700, and 7900 : support levels are 7200, 7000, and 6780.
DJIA futures are down 180 points.
Gold futures are at $4552, silver futures are at $76.85, and oil futures are at $101.34.
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.
