By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
Room In AI Trade
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 NVDA stock broke out above zone 1. Zone 1 was previously resistance and is now support.
- The chart shows on April 9 The Arora Report gave a signal to buy NVDA stock naming NVDA one of the top stocks to buy on the dip. On April 9, NVDA stock traded in the range of $97.53 – $115.10.
- The Arora Report was one of the first to identify the AI revolution in 2022. As a member of The Arora Report, you were ahead of the curve. We shared with you in 2022 that a fortune is to be made all the way to 2030, although it will not be in a straight line. At times, it will be treacherous. You will want expert guidance. Subsequently, when many Wall Street gurus called AI a fad, The Arora Report responded with a crystal clear call that AI was real.
- Being ahead of the curve, members of The Arora Report are long NVDA stock from $12.55. Yesterday, NVDA stock made a new high. NVDA is trading at $156.80 as of this writing in the premarket. At its low after Liberation Day, NVDA stock fell to $86.62. The consensus in the market at that time was the AI trade was over. However, The Arora Report remained steady fast in its conviction that the AI trade had a long way to go. There were signals initiating several trade around positions, including one on NVDA as shown on the chart. Trade around positions is a technique billionaires and hedge funds use to dramatically increase returns while reducing risks. NVDA stock hitting a new high shows The Arora Report’s call on AI was spot on.
- NVDA stock breaking to a new high shows that The Arora Report call that money is to be made in AI all the way to 2030 is proving spot on.
- The sentiment on Wall Street is already extremely bullish. You would think it is difficult to add more bullishness to extreme bullishness, but that is exactly what President Trump has accomplished. President Trump’s actions aim to take away the Federal Reserve’s independence sooner than expected. Here are the key points:
- Powell’s term expires in 11 months.
- Traditionally, the president announces the pick for the new Fed chair three to four months ahead of time.
- President Trump is planning to announce his pick as early as this summer or early fall.
- The belief is that by announcing his pick so early, President Trump will make Powell miserable enough that Powell will do whatever President Trump wants.
- Momo gurus are cheering that President Trump will take away the Fed’s independence and the new Fed chair will be President Trump’s puppet.
- A puppet Fed chair will dramatically cut interest rates, running up the stock market much higher in the short to medium term.
- As the momo crowd celebrates, prudent investors should make money from the short to medium term moves in the stock market but be very concerned for the long term if the Fed loses its independence.
- Foreign investors are already very concerned.
- The dollar hit three year lows on concerns about a puppet Fed chair. If most of your wealth is in dollars, you need to take steps to protect your wealth. The steps include investing in foreign markets, foreign currencies, gold, and other commodities. The easiest way to accomplish the foregoing is to follow the Accelerating Wealth Generation section in the Trade Management Guidelines.
- Initial jobless claims came at 236K vs. 247K consensus. This data indicates that for the time being the jobs picture is strong. It is worth a reminder that the jobs picture drops off very quickly when the economy slows down. Initial jobless claims is a leading indicator and carries heavy weight in the adaptive ZYX Asset Allocation Model with inputs in ten categories, which has a great track record going back 18 years.
- Durable orders data is strong.
- Durable orders came in at 16.4% vs 6.6% consensus.
- Durable orders ex-transport came at 0.5% vs 0.1% consensus.
- In The Arora Report analysis, durable orders is a volatile series, and investors should not assign significant meaning to the strength here.
- Q1 GDP-third estimate came at -0.5% vs. -0.2% consensus. In The Arora Report analysis, this should concern prudent investors as it indicates a slowing economy.
- Q1 GDP deflator-third estimate came at 3.8% vs. 3.7% consensus.
- PCE, the Fed’s favorite inflation gauge, will be released tomorrow at 8:30am ET. In The Arora Report analysis, PCE will likely come inline with expectations. The consensus for headline PCE is 0.1% and 0.1% for core PCE.
- Personal income and personal spending data will also be released tomorrow at 8:30am ET. \
- 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
In the early trade, money flows are positive in Amazon (AMZN), Alphabet (GOOG), Meta (META), Nvidia (NVDA), and Microsoft (MSFT).
In the early trade, money flows are neutral in Apple (AAPL).
In the early trade, money flows are negative in Tesla (TSLA).
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 is *** in 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 are ticking down, and bonds are ticking up.
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.
S&P 500 futures are trading at 6165 as of this writing. S&P 500 futures resistance levels are 6256, 6500, and 6700 : support levels are 6131, 6017, and 5926.
DJIA futures are up 102 points.
Gold futures are at $3333, silver futures are at $36.22, and oil futures are at $65.16.
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.
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.
