By Nigam Arora
To gain an edge, this is what you need to know today.
Mag7 Earnings
Please click here for a chart of leveraged semiconductor ETF (SOXL).
Note the following:
- The chart shows an island reversal in semiconductors. In traditional technical analysis, this is a negative pattern and often indicates a top. Prudent investors should carefully watch semiconductors because semiconductors are the leading sector leading the stock market higher from the March 30 low.
- The chart shows semiconductors are moving higher in the early trade on good earnings from Seagate (STX) and NXPI (NXPI).
- Dutch semiconductor company NXPI reported doubling its first quarter profits. This indicates demand for non-AI semiconductors is increasing.
- NXPI is in the ZYX Buy Core Model Portfolio. NXPI is long from an average of $92.30, representing a 197% gain as of this writing in the premarket.
- Disk drive maker Seagate reported earnings significantly better than whisper numbers and projected strong demand. AI is increasing the need for storage. The three major disk drive manufacturers Seagate, Western Digital (WDC), and Toshiba (TSHTY) are not meaningfully increasing production. Enthusiasm from Seagate is being carried over to semiconductor memory makers Micron (MU) and Sandisk (SNDK).
- In The Arora Report analysis, Seagate projections are assuaging fears from a report yesterday that OpenAI was not meeting its internal targets.
- President Trump is leaning toward leaving the Iran blockade in place for a long time. The hope is that economic pressure will accomplish what military attacks did not accomplish. It appears that President Trump is ruling out the options of simply leaving and declaring victory or bombing Iran again. Please see the oil section below.
- Durable orders data is strong. Here are the details:
- Durable orders came in at 0.8% vs 0.5% consensus.
- Durable orders ex-transportation came at 0.9% vs 0.6% consensus.
- The Fed will announce its rate decision at 2pm ET, followed by Fed Chair Powell’s press conference at 2:30pm ET. The Fed is expected to leave interest rates unchanged. We previously shared with you:
Will Powell decide to stay or leave the Fed after his term as Fed Chair ends? If Powell decides to leave, it will make it easier for Kevin Warsh to cut rates. President Trump has threatened that he will fire Powell if he does not leave.
- Amazon (AMZN), Google (GOOG, GOOGL), Meta (META), and Microsoft (MSFT) will report earnings today after hours. Apple (AAPL) will report earnings tomorrow after hours. These earnings will determine where the stock market goes next.
- Prudent investors should pay special attention to the $650B capex from mega tech companies. Here are the key questions:
- Is there any change in capex?
- How likely is it that capex will prove profitable in the end?
- 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.
Housing Starts
Housing starts are very strong, but building permits that reflect the future are weak. Here are the details:
- Housing starts for March came at 1.502M vs. 1.356M prior.
- Building permits for March came at 1.372M vs. 1.538M prior.
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 neutral in Amazon (AMZN), Nvidia (NVDA), and Tesla (TSLA).
In the early trade, money flows are negative in Apple (AAPL), Microsoft (MSFT), Alphabet (GOOG), and Meta (META).
In the early trade, money flows are mixed in S&P 500 ETF (SPY) and negative in 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
Oil is moving higher on President Trump’s plan to leave the Iran blockade for longer. There is concern that the Iran war will not be resolved and will persist as a low level conflict. If this is the case, it will negatively impact the global economy. For the time being, the stock market momo crowd is oblivious. On the other hand, U.A.E leaving OPEC is positive for the global economy in the long term.
API crude inventories came at a draw of 1.79M barrels vs. a consensus of a build of 0.3M barrels.
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 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 7172 as of this writing. S&P 500 futures resistance levels are 7200, 7500, and 7700 : support levels are 7000, 6780, and 6600.
DJIA futures are down 23 points.
Gold futures are at $4575, silver futures are at $73.06, and oil futures are at $103.47.
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.
