By Nigam Arora
To gain an edge, this is what you need to know today.
Aggressive Stock Buying
Please click here for a chart of Nasdaq 100 ETF (QQQ).
Note the following:
- The chart shows QQQ is bouncing off of the top band of zone 2 (support).
- The chart shows zone 1 (resistance). The consensus wisdom on Wall Street is that this year, QQQ will break above zone 1.
- For a longer term perspective, from the chart take a measure of how far QQQ has come from the Arora buy signals shown on the chart.
- This morning in the early trade, there is aggressive buying in QQQ which represents mostly tech stocks. The buying is especially aggressive in semiconductor stocks and other stocks that are part of the AI trade. The buying is triggered by news that Nvidia (NVDA) is looking at supporting a massive AI data center for OpenAI in Ohio with a $250B backstop. If consummated, this will be one of the largest financial transactions in AI’s history. The project would cost over $500B excluding the chips. The project is being developed by Japan’s Softbank (SFTBY). The power for the project will be funded by Japan under a trade deal that President Trump previously promoted. The power will be controlled by the U.S. government.
- Nvidia is also in talks to finance as much as $350B of Nvidia chip purchases by OpenAI.
- In The Arora Report analysis, there are two important implications for investors:
- The fact that Nvidia is willing to finance perhaps the most ambitious AI project to date, shows Nvidia’s confidence that capex on AI will produce great returns. This implication is what is driving aggressive buying of AI stocks this morning.
- There is also a negative implication of circular financing that the stock market is ignoring for the time being. In circular financing, Nvidia would count $350B in sales to OpenAI, but OpenAI would not be paying for these chips out of its own pocket as the purchase will be financed by Nvidia. The net result is that Nvidia gets no immediate cash for the sale. Investors need to remember that this is the type of circular financing that, in part, lead to the 2000 crash of internet stocks and massive losses for investors in the darlings of the day such as Cisco (CSCO), Northern Telecom (symbol at the time NT), Lucent (symbol at the time LU), and JDS Uniphase (symbol at that time JDSU).
- In addition to the Nvidia news, aggressive stock buying in the early trade is due to President Trump deciding to stop attacking Iran after 13 days of attacks. There is speculation that the reason for stopping the attacks is a shortage of defensive munitions, such as Patriot missiles, to defend against Iran’s counterattacks. RTX, the maker of Patriot missiles, is in the ZYX Buy Model Portfolio and the position has large gains. However, President Trump is denying a shortage of munitions and states that the U.S. has a stock pile of vast quantities of munitions.
- Adding to the positive sentiment is the IPO of CXMT in China. The IPO soared 466% on its first day, and thus became the most valuable stock in China with a valuation of $484B. CXMT is a producer of semiconductor memory and had 8% global market share in 2025.
- In The Arora Report analysis, investors should carefully watch how the U.S. government responds to Apple’s (AAPL) attempts to buy memory from CXMT. If Apple gets permission, it will be negative for Micron stock (MU). In such an event, The Arora Report is likely to issue a signal to completely hedge the MU position in ZYX Buy and issue a short sell signal on MU in ZYX Short. In ZYX Buy, MU is long from an average of $21.77. It is trading at $938.11 as of this writing in the premarket, representing a gain of 4209%.
- As a major milestone, SpaceX (SPCX) launched a successful test flight of Starship. This is the first successful launch of Starship since the SPCX IPO. Over the weekend, momo gurus were pumping SPCX stock and expectations were for SPCX stock to go higher in the early trade. Instead, SPCX is seeing aggressive selling in the early trade as more and more investors are becoming aware of the upcoming massive unlock. You have been ahead of the curve. We wrote on July 22:
Since SpaceX (SPCX) has been added to several indexes, prudent investors should prepare for the volatility caused by a massive unlock of previously restricted shares. On August 6, $116B worth of SPCX stock will become eligible for selling. Short sellers see an opportunity. The estimate is that about 30% of tradeable SPCX shares are now sold short. Prudent investors should be careful about being influenced by the media. There is a fair probability that on August 6, SPCX stock could rally if a short squeeze starts, instead of falling big time as the media is predicting.
- Durable orders data is cooler than expected. Here are the details:
- Durable orders came in at 0.4?% vs 2.0% consensus.
- Durable orders ex-transportation came at 0.6% vs 0.9% consensus.
- 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
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. 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 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 Amazon (AMZN), Nvidia (NVDA), Microsoft (MSFT), Alphabet (GOOG), Meta (META), Tesla (TSLA), and Apple (AAPL).
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 *** gold in the early trade. This is reflected in gold ETF (GLD), silver ETF (SLV), gold miner ETF (GDX), and silver miner ETF (SIL). 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
Interest rates are ticking down, and bonds are ticking up.
The dollar is range bound.
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 7513 as of this writing. S&P 500 futures resistance levels are 7700, 7900, and 8000 : support levels are 7318, 7194, and 7032.
DJIA futures are up 603 points.
Gold futures are at $4086, silver futures are at $59.26, and oil futures are at $84.04.
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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This post was just published on ZYX Buy Change Alert.
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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.
