By Nigam Arora
To gain an edge, this is what you need to know today.
Global Yields Hit 16 Year High
Please click here for a chart of Oracle stock (ORCL).
Note the following:
- The Morning Capsule is about the big picture, not an individual stock. The chart of ORCL stock is being used to illustrate the point.
- The chart shows ORCL stock spiked up after the last earnings. The reason for the spike was Oracle saying it had $500B of backlog for its data centers.
- The chart shows ORCL stock was not able to maintain its spike up and fell when the following were discovered:
- $300B – $350B of the backlog was from ChatGPT maker OpenAI.
- The deal involved circular financing with Nvidia (NVDA).
- In The Arora Report analysis, ORCL stock would have likely pulled back to the zone of $262 – $293 and then risen much higher if it was not for the unexpected development of Oracle’s decision to go on an extreme borrowing binge.
- The chart shows ORCL stock falling as the debt binge increased.
- ORCL went from a conservative, high potential stock to a high risk, high reward stock in one quarter.
- Oracle reports earnings after hours today. Depending upon earnings and the commentary, the stock has the potential to move up $80 or fall $50.
- A move in ORCL stock will likely impact the entire AI trade, and especially data center stocks like IREN (IREN), Nebius (NBIS), CoreWeave (CRWV), and Cipher (CIFR). There is a profitable position on IREN in ZYX Buy. A new signal on IREN is in ZYX Buy.
- As a member of The Arora Report, you have been ahead of the curve regarding yields in Japan. Rising yields in Japan have had a major impact on global bond yields. Today, global bond yields are hitting a 16 year high. This is occurring just before the Fed is highly likely to cut interest rates.
- The consensus is the Fed’s rate cut will be accompanied by hawkish commentary. There are also likely to be dissents in both directions.
- The Fed will announce its interest rate decision today at 2pm ET, followed by a press conference from Fed Chair Powell at 2:30pm ET.
- In spite of all of the negative crosscurrents, investors should not ignore history. History tells us that the last 20 times the Fed cut interest rates when the stock market was within 2% of its all time high, 100% of the time the stock market went higher over the next 12 months. The reason is a part of the excess liquidity the Fed provides goes into the stock market. Keep in mind that this is only one of the many factors investors should consider. Investors should consider using a proven adaptive model that provides a 360 degree analysis like the ZYX Asset Allocation Model.
- 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.
China Neck To Neck In AI Race
It is not politically correct to say, but as a prudent investor, you need to know the truth, irrespective of political correctness. In The Arora Report analysis, there is significant evidence that China is neck to neck with the U.S. in the AI race. The U.S. has a big edge with Nvidia as Nvidia’s Blackwell chip is the most capable AI chip around. The U.S. has banned the export of Blackwell chips to China. How is China keeping up? China appears to be keeping up by smuggling Blackwell chips. There is a new report that the latest DeepSeek AI model was trained on smuggled Blackwell chips.
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) and Tesla (TSLA).
In the early trade, money flows are neutral in Apple (AAPL) and Nvidia (NVDA).
In the early trade, money flows are negative in Microsoft (MSFT), Alphabet (GOOG), and Meta (META).
In the early trade, money flows are mixed 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 4.8M barrels vs. a consensus of a draw of 1.7M barrels.
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
A major international bank that has been uber bullish on bitcoin has cut its bitcoin targets: $100K from prior $200K in 2025, $150K from prior $300K in 2026, and $225K from prior $400K in 2027.
Bitcoin (BTC.USD) is range bound.
Markets
Interest rates are ticking up, and bonds are ticking down.
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 6848 as of this writing. S&P 500 futures resistance levels are 7000 and 7200 : support levels are 6780, 6500, and 6256.
DJIA futures are down 2 points.
Gold futures are at $4230, silver futures are at $61.51, and oil futures are at $58.36.
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.
