By Nigam Arora
To gain an edge, this is what you need to know today.
Nvidia Earnings Ahead
Please click here for a chart of semiconductor ETF (SMH).
Note the following:
- As the stock market eagerly awaits Nvidia (NVDA) earnings after the close today, it is instructive to look at the chart of SMH.
- The chart shows the past nine Nvidia earnings reports and the reaction of semiconductor stocks to the earnings.
- The chart shows SMH is above the 2024 high.
- The chart shows SMH is in zone 1 (resistance).
- RSI on the chart shows SMH is neither overbought nor oversold.
- Due to the high importance of Nvidia, there has been speculation that the U.S. may want to take a stake in Nvidia. Treasury Secretary Bessent is saying that the U.S. taking a stake in Nvidia is not on the table.
- Whisper numbers for Nvidia earnings are higher than the consensus numbers.
- Nvidia earnings will have a major impact, not only on semiconductor stocks but on the entire stock market.
- 50% tariffs on India go into effect today. It was not long ago that under President Trump the U.S. and India were on a path to closer ties to counter China’s growing ambitions. In one quick swoop, the relationship between the U.S. and India soured when the U.S. imposed 25% reciprocal tariffs on India for buying Russian oil. The U.S. expectation was that India would stop buying Russian oil in order to avoid the tariffs. Instead, India has defied the U.S.
- In spite of the massive pain tariffs will inflict, India has stood up to the U.S.
- After a frosty relationship with China for years, India is tilting towards China. Prime Minister Modi is heading to China for the first time in six years.
- India is drawing closer to Russia.
- India appears to be rethinking its plan to buy more weapons from the U.S.
- So far, the India stock market is holding up and foreign money is not fleeing India.
- China is the clear winner. This is one of the reasons foreign money is flowing into Chinese stocks.
- Prudent investors should note that China imports about half of Russian oil and there are no reciprocal tariffs against China for importing Russian oil. India imports about one third of Russian oil.
- As a heads up, if the present trend of foreign money flowing into China and the Chinese stock market going up continues, prudent investors would want to consider investing in China. This is a stark departure from The Arora Report’s stance in recent years to have only a small investment or no investment in China. ZYX Emerging has covered China continuously for 18 years.
- Exxon (XOM) has held secret talks with Rosneft, an oil company controlled by the Russian government, for joint projects. Exxon exited Russia after Russia attacked Ukraine. This is an indication of how the world may be shifting. If the shift continues, prudent investors will want to get ahead of it for high risk adjusted returns.
- The E.U. is working on removing U.S. tariffs.
- The Swiss National Bank (SNB) has the world’s third largest reserves. Recently, the U.S. imposed 39% tariffs on Switzerland. Now, SNB is moving some of its assets from dollars to euros.
- 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 Nvidia (NVDA) and Microsoft (MSFT).
In the early trade, money flows are neutral in Amazon (AMZN), Tesla (TSLA), and Apple (AAPL).
In the early trade, money flows are negative in Alphabet (GOOG) and Meta (META).
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. 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 *** 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 0.974M barrels vs. a consensus of a draw of 1.7M barrels. This data is bearish, but the driving force for oil is tariffs against India.
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
Interest rates are ticking up, and bonds are ticking down.
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 6480 as of this writing. S&P 500 futures resistance levels are 6500, 6700, and 7000 : support levels are 6256, 6131, and 6017.
DJIA futures are up/down points.
Gold futures are at $3431, silver futures are at $38.33, and oil futures are at $63.48.
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.
