By Nigam Arora
To gain an edge, this is what you need to know today.
AI Rally Test
Please click here for a chart of Micron stock (MU).
Note the following:
- The Morning Capsule is about the big picture, not an individual stock. The chart of MU stock is being used to illustrate the point.
- The trendline on the chart shows MU stock has gone parabolic. The reason for the parabolic move is that money started flowing into second tier AI plays. Investors are already overweight in first tier AI plays, such as Nvidia stock (NVDA).
- RSI on the chart shows MU stock is overbought. Overbought stocks are susceptible to a pullback.
- MU is in ZYX Buy in the portfolio that surrounds the Core Model Portfolio. MU is long from $21.77. MU is trading at $166.15 as of this writing in the premarket, representing a 663% gain.
- Micron is scheduled to report earnings today after the regular session close. Investors have high expectations for Micron earnings given rising memory prices and momentum from the AI trade driving revenue from Micron’s high bandwidth memory.
- Micron earnings will test the AI rally that was triggered by recent Nvidia moves.
- Nvidia announced a strategic partnership with OpenAI along with a $100B investment in OpenAI for data center and power capacity. Details are being finalized, but Nvidia and OpenAI expect the first phase, which will use Nvidia’s upcoming Rubin platform, to be online in the later half of 2026.
- In The Arora Report analysis, Nvidia is acting as a backstop for OpenAI financing to keep the AI rally going. Further, in The Arora Report analysis, Nvidia has now become the king maker in AI.
- IonQ (IONQ) reached a technological breakthrough in quantum computing. IonQ demonstrated the conversion of visible photons into telecom wavelengths from its trapped-ion systems. The breakthrough is a critical milestone to interconnecting quantum computers using existing fiber optic cables over long distances. This is a step towards a distributed quantum internet. Other quantum stocks like RGTI, QUBT, and QBTS are also moving on the news. There is a position in RGTI in ZYX Buy.
- Quantum computing has a very bright future and will provide significant opportunities for investors. In The Arora Report analysis, right now quantum computing stocks are way overvalued and present significant risk. Investors need to be ultra-cautious because much of the information on quantum computing stocks in the media and coming out of Wall Street is highly promotional and not objective. It is important for investors to understand that there are several quantum computing technologies. It is not known at this time which technology will win. For those who want next level knowledge, there is a podcast series on quantum computing in Arora Ambassador Club, providing investors with objective information and knowledge.
- Investors are excited about Rocket Lab’s (RKLB) two spacecraft arriving at the Kennedy Space Center. The spacecraft will study Mars’s magnetosphere. In The Arora Report analysis, space will present significant opportunities over the coming years; however, right now, space stocks are way overhyped.
- Adding to exuberance in AI, Oracle (ORCL) stock ran up yesterday on the announcement of Mike Sicilia and Clay Magouyrk as new co-CEOs. Sicilia brings a depth of experience in applied AI and Magouyrk built Oracle Cloud Infrastructure. This is on top of the exuberance created by President Trump’s decision that Oracle will manage the TikTok algorithm.
- Fed Chair Powell will speak today around 12:30pm ET. Powell’s speech may be market moving. At The Arora Report, we will be carefully listening for clues about future interest rate cuts.
- 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 Amazon (AMZN), Alphabet (GOOG), Meta (META), and Tesla (TSLA).
In the early trade, money flows are neutral in Microsoft (MSFT).
In the early trade, money flows are negative in Apple (AAPL) and Nvidia (NVDA).
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
Gold has continued to rocket with gold futures crossing $3800 as of this writing.
China is making a major move to increase its national standing in the bullion market. China aims to become a major custodian of sovereign gold funds. This is taking a direct aim at the U.S.’s supremacy in this area.
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. Money continues to flow out of bitcoin and ether (ETH.USD) in to gold ETF (GLD) and silver ETF (SLV).
Markets
Interest rates are range bound.
The dollar is range bound.
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 6751 as of this writing. S&P 500 futures resistance levels are 6780, 7000, and 7200 : support levels are 6500, 6256, and 6131.
DJIA futures are up 44 points.
Gold futures are at $3818, silver futures are at $44.64, and oil futures are at $63.05.
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.
