By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
Making Money From Crowd Stampede
Please click here for a chart of Palantir stock (PLTR).
Note the following:
- The Morning Capsule is about the big picture, not an individual stock. The chart of PLTR is being used to illustrate the point.
- The chart shows that PLTR stock has gone vertical.
- The chart shows that the Arora core position was bought at $20.15 and now has a gain of 256%.
- The chart shows when the Arora trade around position signal was given. A trade around position is a technique used by billionaires and hedge funds that can dramatically increase returns and reduce risks.
- The Arora Report system is close to giving another signal for a new trade around position on PLTR. The Arora Report system combines the best elements of macro analysis, fundamental analysis, technical analysis, quantitative analysis, sentiment, and crowd behavior all with an overlay of change and innovative risk controls.
- Palantir is a defense contractor providing mostly AI-based software.
- Being a defense contractor is a complex business. Historically, it has taken defense contractors a very long period, many acquisitions, and storied histories to become large.
- With Palantir, it is the first time that a company has become the largest defense contractor by market cap in the blink of an eye. More remarkable is that Palantir has achieved this feat not through a long storied history and not through acquisitions. Palantir has reached this status through a momo crowd and meme crowd stampede.
- The chart shows that money is to be made by taking advantage of momo crowd and meme crowd stampedes. Over the years, we have helped our members make money from these stampedes on a number of stocks. Of course, prudent investors should have risk controls in place and be patient.
- PLTR was recently added to the ZYX Buy Core Model Portfolio. RTX is also in the ZYX Buy Core Model Portfolio. The position is highly profitable. There has also been a very successful trade around position on RTX.
- RTX is the second largest defense contractor now by market cap.
- Here is a comparison of a few key metrics between PLTR and RTX.
- PLTR trailing PE is 354. RTX trailing PE is 34.
- PLTR forward PE is 151. RTX forward PE is 19.
- PLTR price/sales is 65. RTX price/sales is 2.
- Based on the ZYX Change Method quantitative screen, the highest reasonable valuation of PLTR is under $40. PLTR is trading at $71.74 as of this writing in the premarket.
- The very long term Arora target for PLTR is $123 – $136.
- The foregoing also illustrates the extreme positive sentiment in the stock market.
- This morning, the stock market is front running Fed Chair Powell. Powell will be speaking later today. The hopium is that Powell will be dovish and indicate a rate cut is coming in spite of a large set of data showing that it is imprudent to cut rates at this time.
- Buying in the early trade is largely focused on large cap tech stocks as well as speculative junk stocks.
- Also adding to the buying are comments on Salesforce (CRM) and Marvell (MRVL) conference calls regarding AI.
- As an actionable item, the sum total of the foregoing is in the protection band, which strikes the optimum balance between various crosscurrents. Please scroll down to see the protection band. The 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 Amazon (AMZN), Nvidia (NVDA), Microsoft (MSFT), Alphabet (GOOG), Tesla (TSLA), and Apple (AAPL).
In the early trade, money flows are negative in Meta (META).
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.
Very Very Short-Term Indicator
Our 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 build of 1.232M barrels vs. a consensus of a draw of 2.06M 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 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 6083 as of this writing. S&P 500 futures resistance levels are 6131 and 6256: support levels are 6017, 5926, and 5748.
DJIA futures are up 192 points.
Gold futures are at $2671, silver futures are at $31.41, and oil futures are at $70.14.
Protection Band And What To Do Now
It is important for investors to look ahead and not in the rearview mirror. The proprietary protection band from The Arora Report is very popular. The 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.
Dr. Natasha Arora
Dr. Natasha Arora has significant expertise in investment analysis especially biotech, healthcare, and technology. Natasha is a graduate of Harvard Medical School followed by a postdoc at MIT. She has published several peer reviewed research papers in top science journals.
