By Nigam Arora & Dr. Natasha Arora

To gain an edge, this is what you need to know today.

Course Of AI Rally

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.
  • Micron earnings will determine the course of the AI rally.  Micron earnings will be released Wednesday after the close.
  • The chart shows a gap up after earnings release last quarter.  Bulls are expecting a similar gap up this time.  However, prudent investors know that earnings is a risk event and the results can go either way.  Consider starting with Arora Second Law of Investing and Trading, which states, “Nobody knows with certainty what is going to happen in the markets.”  Consider following with Arora’s Third Law, which states, “Making investing and trading decisions based on probabilities is the only realistic and profitable approach.”
  • The chart shows that in June, MU stock accelerated away from the trendline.
  • The chart shows last week MU stock traced a bearish engulfing candle.  This is a negative pattern.
  • The bearish engulfing pattern in Micron coincided with a bearish engulfing pattern in Nvidia (NVDA).  Please see the Morning Capsule dated June 21.
  • High bandwidth memory is essential for AI data centers.  As we have previously shared with you, Micron is sold out of high bandwidth memory for the rest of the year.  Members of The Arora Report are long MU from $21.77.  This represents a gain of 553%.
  • Consensus earnings estimates for Micron are $0.48 and $6.6B for revenue.
  • Whisper numbers have been creeping up and are now at $0.55 in earnings and $7B in revenue.
  • Stocks move based on the difference between the reported numbers and whisper numbers.  Whisper numbers are the numbers analysts privately share with their best clients and are often different from the numbers the same analysts publish for the public.
  • The fate of the AI rally, and in turn the fate of the entire stock market in the near term, depends on Micron earnings, projections, and the commentary.  Historically, Micron’s CEO tends to be very bullish.   For those who want to trade MU stock or want to understand Micron in more granularity, there will be a separate post giving probabilities and zones.
  • Nvidia (NVDA), the king of AI, continues to go lower in volatile trading after tracing a negative technical pattern last week.  Of note is that there was a rally attempt around 8am ET, but the rally attempt failed.  If a rally attempt succeeds, it will move the entire stock market to the upside.
  • Prudent investors should note that NVDA stock has drifted down in spite of massive buying by the technology ETF XLK.  XLK has about $72B in assets.  Last week, it increased NVDA weighting from about 5% to over 20%.  XLK compensated by reducing AAPL’s weighting from about 21% to about 5%.
  • The European commission has told Apple (AAPL) that preliminarily Apple’s App Store is in breach of the Digital Markets Act (DMA).  Investors are ignoring it because in the past, Apple’s violations of regulations have resulted in only slaps on the wrist.  However, prudent investors should pay attention to DMA because DMA has teeth.
  • Chicago Fed President Austan Goolsbee is optimistic that inflation data will improve as the economy is showing signs of cooling.
  • 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. The protection band is one of the large number of unique edges that are available to members of The Arora Report.

Magnificent Seven Money Flows

In the early trade, money flows are positive in Meta (META) and Tesla (TSLA).

In the early trade, money flows are neutral in AAPL, Amazon (AMZN), and Alphabet (GOOG).

In the early trade, money flows are negative in Microsoft (MSFT) and NVDA.

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.


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.


The momo crowd is *** oil in the early trade.  Smart money is *** in the early trade.

For longer-term, please see oil ratings.


Money flows in bitcoin ETFs have cooled.  This is leading to a drop in bitcoin (BTC.USD). Bitcoin is trading below $62,000 as of this writing.


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 are ticking up, and bonds are ticking down.

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.

Gold futures are at $2339, silver futures are at $29.65, and oil futures are at $80.99.

S&P 500 futures are trading at 5536 as of this writing.  S&P 500 futures resistance levels are 5622 and 5748: support levels are 5500, 5400, and 5256.

DJIA futures are up 85 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.

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 seven 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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Picture of Nigam Arora

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.

Picture of Dr. Natasha Arora

Dr. Natasha Arora

Dr. Natasha Arora has significant expertise in investment analysis especially biotech, healthcare, and technology. Natasha is a graduate of Harvard Medical School followed by a postdoc at MIT. She has published several peer reviewed research papers in top science journals.

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