MUSK SPENDS $130M – TESLA GAINS $344B ON TRUMP ELECTION, STOCK MARKET FOCUSING ON TRUMP APPOINTMENTS

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By Nigam Arora & Dr. Natasha Arora

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

Incredible Gain

Please click here for a chart of Tesla stock (TSLA).

Note the following:

  • The Morning Capsule is about the big picture, not an individual stock.  The chart of TSLA stock is being used to illustrate the point.
  • The chart shows TSLA stock broke out on Trump’s election.
  • The chart shows the Arora buy signal that was given in the premarket after Trump’s election.
  • The chart shows there have been nice profits on this trade.  Partial profits have been taken.
  • The chart shows that TSLA stock hit the low band of the resistance zone.
  • The chart shows that this morning TSLA stock is backing off.  This is an early indication that the Trump rally may be slowing.
  • Tesla’s CEO Elon Musk spent $130M supporting Trump.  Since Trump’s election, TSLA stock has added $344B in market value.  This is an incredible gain.  There are additional gains in the private market value of Musk’s SpaceX.
  •  Wall Street believes that Musk’s relationship with Trump will yield substantial gains for both Tesla and SpaceX.
  • TSLA has been added to the ZYX Buy Core Model Portfolio.   Please see the Model Portfolio for the target zone and recommended position size.  The TSLA position is suitable for aggressive investors.  Those who are not aggressive may consider a smaller quantity.
  • RSI on the chart shows that TSLA is overbought and may pullback.
  • In The Arora Report analysis, markets across the globe are now focused on Trump’s appointments for key positions.  
    • Trump appears to be picking China hawks.  As a result, stocks in Hong Kong fell 2.8%.
    • Trump appears to be picking Iran hawks who are very pro-Israel.  This is causing markets in Asia and Europe to fall.  This is also bringing buying into oil and gold. 
    • Trump appears to be picking deportation hawks.  This is impacting markets in Mexico and South America.  
  • In The Arora Report analysis, the rally yesterday was driven primarily by retail investors after the weekend pump on social media.  Prudent investors need to be careful that the gurus who pump on social media often dump into the rallies caused by their followers buying.  
  • 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.
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Magnificent Seven Money Flows

In the early trade, money flows are positive in Amazon (AMZN), Meta (META), and Nvidia (NVDA).

In the early trade, money flows are neutral in Apple (AAPL), Alphabet (GOOG), and Microsoft (MSFT).

In the early trade, money flows are negative in TSLA.

In the early trade, money flows are negative 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.

Very Very Short-Term Indicator

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.

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) rally is slowing as it approaches $90,000.

Markets

Interest rates are ticking up, and bonds are ticking down.

The dollar is stronger.

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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 6029 as of this writing.  S&P 500 futures resistance levels are 6131 and 6256: support levels are 6017, 5926, and 5748.

DJIA futures are up 46 points.

Gold futures are at $2616, silver futures are at $30.81, and oil futures are at $68.87.

Protection Band And What To Do Now

It is important for investors to look ahead and not in the rearview mirror.  The proprietary protection band from The Arora Report is very popular.  The 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.

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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.

To take a free 30-day trial to paid services to gain access to more opportunities, please click here.

This post was just published on ZYX Buy Change Alert.

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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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