By Nigam Arora
To gain an edge, this is what you need to know today.
Extreme Euphoria
Please click here for a chart of Oklo stock (OKLO).
Note the following:
- The Morning Capsule is about the big picture, not an individual stock. The chart of OKLO stock is being used to illustrate the point.
- The chart shows extreme euphoria in OKLO stock.
- The VUD indicator on the chart helps investors dig below the surface. The VUD indicator is the most sensitive measure of net supply demand in real time. The orange represents net supply and the green represents net demand.
- The chart shows the VUD indicator is mostly green. Typically, when a stock goes parabolic, there are strong periods of orange in the VUD indicator; this is not the case with OKLO stock. The interpretation is extreme euphoria.
- OKLO is an important stock for the entire stock market because it is developing smart modular reactors to provide nuclear power for AI data centers, OpenAI CEO Sam Altman is an ex-chairman of Oklo, Energy Secretary Chris Wright was on Oklo’s board, and OKLO is one of the most popular stocks among the momo crowd.
- The euphoria in OKLO stock started building prior to President Trump’s visit to the U.K. on rumors that President Trump would announce major contracts for Oklo in the U.K.
- Leading to President Trump’s visit, OKLO added $3.69B in market cap.
- During and after President Trump’s visit to the U.K., OKLO added another $6.05B to its market cap.
- The rampant speculation about contracts in the U.K. has nearly doubled OKLO’s market cap to $19.96B.
- By now, you may be asking how big are the nuclear power contracts for Oklo in the U.K.? The answer may surprise you – President Trump did not announce any contracts for Oklo. As of this writing, there are no firm contracts for Oklo in the U.K. Does it concern the momo crowd that has been euphorically buying OKLO stock? The answer is no as they have already moved on to buying based on today’s news. This morning, the momo crowd is buying OKLO stock as the media highlights that Oklo will conduct a groundbreaking ceremony at Idaho National Laboratory for its first Aurora powerhouse. The momo crowd is oblivious that this event was long planned and is the result of old news that was already discounted.
- Nuclear energy has a bright future and represents significant opportunities for investors. Smart modular reactor company NuScale Power (SMR) is in ZYX Buy in the portfolio that surrounds the Core Model Portfolio. There is also a list of 12 nuclear stocks divided into five categories of opportunity available from the main menu of ZYX Buy. These categories are conventional nuclear power, uranium, smart modular reactors, nuclear fuel, and suppliers. For those who want next level understanding of the implications of OKLO euphoria, a new podcast titled “Irrational Smart Modular Reactor U.K. Frenzy – Opportunities In Nuclear Part 6” is in post-production.
- Prudent investors know that the extreme euphoria in OKLO has implications for the entire stock market. The OKLO move is another data point in what we have been sharing with you that sentiment is in the extreme positive zone. Extreme sentiment is a contrary indicator. In plain English, this means sell. However, several nuances are worth a reminder:
- Sentiment is not a precise timing indicator.
- Sentiment can stay in the extreme positive zone for a long time.
- When sentiment is in the extreme positive zone, it does not mean to sell wholesale. It means the following:
- Be highly cautious in starting new strategic positions.
- Most new positions should be tactical.
- It is important to have strict risk controls such as appropriate position sizes and stop losses.
- There is merit to trimming or taking partial profits.
- As an actionable item, when sentiment is in the extreme positive zone, most investors should consider being in the upper half of the Arora Protection Band.
- President Trump announced that there will be a $100K fee for new H1B visa applicants. There is a lot of noise in the media on this matter. Investors should avoid the noise and stay laser focused on what it means for the stock market. There is a serious concern among prudent investors this morning that the new fee will reduce growth in the U.S. overall as the U.S. already suffers from a shortage of highly skilled technical professionals. Further, there is concern that the impact will be negative for the Magnificent Seven. To understand the impact, investors should consider the companies that are the largest users of the H1B program. The largest users of H1B are Amazon (AMZN), Cognizant Technology Solutions (CTSH), Google (GOOG), Microsoft (MSFT), Infosys (INFY), Meta (META), Intel (INTC), JPMorgan Chase (JPM), Apple (AAPL), and Walmart (WMT). ZYX Short by The Arora Report has a short position in INFY.
- In The Arora Report analysis, the new fee on H1B visas will neither have a negative impact on growth nor a negative impact on Mag 7 companies for the following reasons:
- All of the companies named above already have extensive operations in India. These companies will simply hire more people in India instead of bringing them to the U.S.
- There appears to be no impact on existing H1B holders as long as they stay with the same employer.
- A big percentage of H1B holders are software coders. AI is already coding about one half of software, reducing the need for coders.
- Expect companies to become more efficient using AI and thus simply employ fewer skilled engineers.
- There is also a concern that Americans who will get the jobs that would have otherwise gone to H1B holders will need to be paid higher wages, and this will lead to higher inflation. In The Arora Report analysis, the new fee will not lead to higher inflation because the number of jobs impacted is very small compared to the massive U.S. economy.
- In The Arora Report analysis, it is conceivable that the new $100K visa fee is a classic Trump technique to put pressure on India in trade negotiations that are just beginning again.
- In a rare occurrence this morning, money is moving out of bitcoin (BTC.USD) and ether (ETH.USD) and into gold ETF (GLD) and silver ETF (SLV).
- The Fed’s newest member Stephen Miran will be speaking today and providing the rationale behind his dissent in the last FOMC meeting. If he is persuasive, his speech may bring buying into the stock market.
- 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.
India
There is concern in the Indian stock market that the new visa fee will negatively impact India in a big way. In The Arora Report analysis, the new fee will have a negative impact in the short term but will likely be a positive for India in the long term.
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 and indexes. 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 and indexes 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 Apple (AAPL) and Tesla (TSLA).
In the early trade, money flows are negative in Amazon (AMZN), Alphabet (GOOG), Nvidia (NVDA), Microsoft (MSFT), 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
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 seeing selling.
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 6700 as of this writing. S&P 500 futures resistance levels are 6780, 7000, and 7200 : support levels are 6500, 6256, and 6131.
DJIA futures are down 165 points.
Gold futures are at $3750, silver futures are at $43.75, and oil futures are at $61.92.
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.
