By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
Blackwell Guidance Is The Key
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.
- In the history of the stock market, there has seldom been a stock like NVDA. Nvidia earnings will determine the near term course of the stock market.
- The chart shows that NVDA stock staged a major rally after touching the low band of the support zone.
- The chart shows that over the last few days NVDA stock has been consolidating.
- The chart shows the consolidation has been on average volume, indicating that there is not strong conviction ahead of earnings.
- The options market indicates a tilt towards buying.
- The Arora Report’s proprietary VUD indicator measures net supply and demand in real time. Going into earnings, the VUD indicator for NVDA is mixed.
- RSI on the chart shows that NVDA stock can easily go in either direction.
- The momo crowd is aggressively buying NVDA stock. The belief among the momo crowd is that NVDA will go to $150 after earnings.
- Institutions and hedge funds continue to trim NVDA ahead of earnings. They are not trimming because they are negative on NVDA. They are trimming because they know that earnings is a risk event. Smart money tends to reduce risk ahead of events. In contrast, the momo crowd buys ahead of events because the momo crowd is fixated on the possible rewards and ignores the risks.
- As we have been sharing with you, whisper numbers for Nvidia earnings continue to ratchet up. Whisper numbers are higher than consensus.
- Stocks move based on the difference between the reported numbers and whisper numbers. Whisper numbers are the numbers that analysts privately share only with their best clients. Whisper numbers from the same analysts are often quite different from the numbers they publish for public consumption. Whisper numbers is a technique used by analysts to drum up business.
- Previously we shared with you that Nvidia was expecting significant Blackwell revenues this year. Blackwell is the next generation system from Nvidia.
- In large part, the drop in NVDA stock shown on the chart from the highs was related to the potential delay in Blackwell shipments.
- The rally in NVDA stock shown on the chart is in part due to analysts defending Nvidia and a building consensus that the delay is only for four to six weeks.
- In The Arora Report analysis, what happens to NVDA stock and the stock market, in large part, will depend on Nvidia’s guidance on Blackwell shipments.
- The options market is implying about a 10% move in either direction after Nvidia earnings, compared to the prior 9%. Such a move will mean value creation or value destruction of about $300B.
- 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 neutral in NVDA, Amazon (AMZN), Microsoft (MSFT), Alphabet (GOOG), Meta (META), and Apple (AAPL).
In the early trade, money flows are negative in Tesla (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.
Gold
The momo crowd is *** in gold in the early trade. Smart money is *** in the early trade.
For longer-term, please see gold and silver ratings.
Oil
API crude inventories came at a draw of 3.4M barrels vs. a consensus of a draw of 3M barrels.
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) has seen a significant sell off as bitcoin whales unload bitcoin to retail investors. As is their pattern, bitcoin whales tend to sell bitcoin into the strength generated by retail buying.
There are three other developments negatively impacting bitcoin.
- Telegram is a messaging app that is popular among bitcoin users. French authorities have arrested Pavel Durov, the Russian born founder of Telegram. France is investigating criminal activities on the app.
- A bitcoin rival toncoin has crashed. The reason for the toncoin drop is that toncoin is linked to Telegram.
- The third reason is a leak that Russia is getting ready to set up crypto exchanges. Russia’s intention is to use bitcoin to circumvent U.S. sanctions.
Both Trump and Harris are showing enthusiasm for crypto to garner votes from single issue voters – these are crypto bulls. In The Arora Report analysis, the concern is that when elected the new president will not support crypto due to the Russia development.
Those serious about making money from bitcoin need to understand the secrets of bitcoin whales. To learn bitcoin whales’ secrets, listen to the podcast titled “WHALES’ SECRETS YOU NEED TO KNOW: CAPTURING BITCOIN PROFITS.” The podcast is available in Arora Ambassador Club.
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 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.
Gold futures are at $2536, silver futures are at $29.39, and oil futures are at $74.75.
S&P 500 futures are trading at 5643 as of this writing. S&P 500 futures resistance levels are 5748 and 5926: support levels are 5622, 5500, and 5400.
DJIA futures are down 19 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 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.
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.
