By Nigam Arora
To gain an edge, this is what you need to know today.
Two Nvidia Shockers
Please click here for a chart of Nvidia stock (NVDA).
Note the following:
- The Morning Capsule is about the big picture, not an individual stock. The chart of NVDA stock is being used to illustrate the point.
- The chart shows a big move up yesterday on a revenue shocker and flurry of deals from Nvidia.
- The chart shows another up move in NVDA stock driven by President Trump.
- Yesterday, revenue projections from Nvidia were a shocker. Here are the key points:
- Nvidia has visibility into more than $0.5T in cumulative Blackwell and Rubin revenue through CY2026.
- The foregoing revenue visibility is more than five times Hopper’s lifetime revenue.
- These projections are significantly higher than not only the current consensus but also higher than the most optimistic estimates prior to yesterday.
- Nvidia CEO Jensen Huang spoke at the GTC DC conference yesterday, stunning the market with a flurry of partnership announcements including with:
- Eli Lilly (LLY)
- Palantir (PLTR)
- Hyundai (HYMLF)
- Samsung (SSNLF)
- Uber (UBER)
- Nvidia also announced a $1B investment in Nokia. This is not good news for networking equipment providers Ciena (CIEN) and Arista Networks (ANET).
- Nvidia announced NVQLINK – this is Nvidia’s system to connect quantum computers with Nvidia based AI super computers. The technology is designed for hybrid quantum-classical computing. Quantum computing stocks such as IonQ (IONQ), Rigetti (RGTI), D-Wave Quantum (QBTS), and Quantum Computing (QUBT) staged a vicious technical reversal on the announcement even though some of these companies are part of Nvidia’s initiative. The drop was triggered by fears of more competition.
- Nvidia is long in the ZYX Buy Core Model Portfolio from $12.55. NVDA is trading at $207.62 as of this writing in the premarket, representing a gain of 1554%.
- As you may recall, The Arora Report was one of the first in 2022 to make a high conviction call that AI was real. As is often the case, members of The Arora Report have also been ahead of the curve in terms of the target on NVDA stock. The Arora Report was the first with a high target for NVDA stock. Now, other analysts are playing catch up.
- In The Arora Report analysis, if the trend continues, Nvidia’s market cap could reach $5T.
- A signal for a new trade around position in NVDA stock will be in ZYX Buy. A trade around position is a technique used by hedge funds and billionaires that can dramatically increase returns and reduce risks.
- Previously, the U.S. administration has not allowed Nvidia to export even chips with lesser capability than Blackwell to China on national security grounds. China wants to replace the U.S. as the world’s superpower. To a large degree, if China will succeed depends upon which country wins the artificial intelligence race. Blackwell is the most powerful Nvidia chip, and it will help China compete with the U.S. on AI. In a shocker, President Trump said he will talk to China’s President Xi about Blackwell chips.
- As we have been sharing with you all along, the momo crowd’s pattern is to buy ahead of the Fed decision. True to its pattern, the momo crowd aggressively bought stocks yesterday and is buying stocks in the early trade today.
- The FOMC will announce its interest rate decision today at 2pm ET and will be followed by Fed Chair Powell’s press conference at 2:30pm ET.
- Today is the busiest day for earnings. Companies with a total market cap of $11T are reporting earnings today. Most notable are earnings from Microsoft (MSFT), Meta (META), and Alphabet (GOOG, GOOGL), which will be reported after the regular session close.
- There is a lot of optimism about the meeting between President Trump and President Xi tomorrow. President Trump is floating the idea of cutting China tariffs. China purchased the first shipments of U.S. soybeans.
- 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), Nvidia (NVDA), Microsoft (MSFT), and Tesla (TSLA).
In the early trade, money flows are neutral in Apple (AAPL), Alphabet (GOOG), and Meta (META).
In the early trade, money flows are positive 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’s pattern is to buy gold ahead of the Fed rate announcement.
True to its pattern, 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 *** in 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 and bonds are range bound.
The dollar is stronger.
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 6941 as of this writing. S&P 500 futures resistance levels are 7000 and 7200 : support levels are 6780, 6500, and 6256.
DJIA futures are up 90 points.
Gold futures are at $4039, silver futures are at $48.38, and oil futures are at $60.17.
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.
