By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
Huang Speech Ahead
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 the longest ever run in NVDA stock.
- The chart shows that lately, NVDA stock has been volatile after it traced an outside day. In traditional technical analysis, an outside day is a reversal pattern.
- The chart shows an Arora signal to hedge was given at the top, right before the big drop. Members of The Arora Report have very large profits in NVDA as the stock was bought at an average of $125.51 in the buy zone shown on the chart. NVDA is trading at $902.16 as of this writing in the premarket, representing a profit of 619% in 17 months.
- RSI on the chart shows the NVDA is no longer technically overbought and can go either way.
- Expect the crowd to continue to buy NVDA as long as the trendline shown on the chart holds.
- NVDA has now become the most popular stock for call option buyers, replacing Tesla (TSLA). Call options are bullish bets.
- As we previously shared with you, Nvidia’s annual AI conference is starting today.
- Since the stock market has been driven by the AI frenzy and NVDA stock has been the leader, the Nvidia conference is a very important event for the stock market.
- Most important is Nvidia CEO Jensen Huang’s speech this afternoon.
- Expectations are running extremely high.
- Investors are eagerly awaiting Huang’s vision for artificial intelligence.
- Investors are also awaiting developments on the next AI chip from Nvidia that will replace H100.
- In an incredible turn of events, Jensen Huang has become more important for the stock market than Fed Chair Jerome Powell.
- Apple (AAPL) has fallen behind in AI. Now, Apple is trying to catch up by licensing Google’s Gemini and negotiating with Google to incorporate Gemini into the iPhone.
- In The Arora Report analysis, such a move will bring regulator scrutiny.
- In The early trade, excitement over Nvidia’s AI event is driving aggressive momo crowd buying in stocks.
- 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.
Magnificent Seven Money Flows
In the early trade, money flows are positive in AAPL, Amazon (AMZN), Alphabet (GOOG), Meta (META), Nvidia (NVDA), and TSLA.
In the early trade, money flows are negative in Microsoft (MSFT).
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.
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) is range bound.
Markets
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 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.
Gold futures are at $2165, silver futures are at $25.45, and oil futures are at $80.93.
S&P 500 futures are trading at 5222 as of this writing. S&P 500 futures resistance levels are 5256, 5400, and 5500: support levels are 5210, 5020, and 4918.
DJIA futures are up 63 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.
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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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.
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.
