By Nigam Arora
To gain an edge, this is what you need to know today.
Big Tech Earnings Ahead
Please click here for a chart of leverage semiconductor ETF (SOXL).
Note the following:
- Semiconductors reflect the AI trade, and SOXL is the momo crowd’s favorite.
- The chart shows SOXL last week dropped to near the low band of zone 3 (support).
- On Friday, we wrote:
The chart shows the nine day RSI reached 0.0, the most extreme oversold level RSI can be. The chart shows that during the period shown on the chart, RSI has never been this low.
- RSI of 0.0 on Friday forecasted a bounce. This morning in the early trade, as the chart shows, SOXL has rallied from near the bottom band of zone 3.
- To gain a perspective, the semiconductor index (SOX) has lost 15.7% over the last eight days. The last time a similar pattern occurred was in October 2008, when SOX lost 19.8%. On the following Monday, SOX gained 9.7% as the momo crowd super aggressively bought the dip. Subsequently, SOX fell much lower. Keep in mind history does not always repeat itself.
- Momo crowd buying in semiconductors this morning is extremely aggressive. Momo gurus are spreading the narrative that the semiconductor pullback is over and urging their followers to buy semiconductors aggressively.
- Meta (META) and Tesla (TSLA) kick off big tech earnings on Wednesday. Meta and Tesla earnings and the stock market’s reaction will be a test for the stock market.
- In The Arora Report analysis, Meta’s earnings will be especially instructive:
- The most important will be Meta’s capital spend projections.
- The reaction of the AI trade to Meta’s capital spend number will be more instructive than the market’s reaction in META stock. The reason is that META stock has another major factor in Muse AI agent adaption.
- The momo crowd is aggressively buying stocks of neoclouds this morning, including CoreWeave (CRWV), Nebius (NBIS), and IREN (IREN). CRWV stock plunged last week on heavy debt concerns.
- Apple (AAPL) is seeing extraordinary demand for its foldable phone. Apple is important because during the AI trade carnage of the last week, money was flowing out of the AI trade and into the presumed safety of AAPL stock.
- In The Arora Report analysis, long term investors should pay careful attention to President Putin’s proposal.
- President Putin is proposing that he, President Trump, and President Xi meet on Chinese soil to decide an end to the Ukraine war on terms favorable to Russia.
- Ukraine will not be included in the talks.
- Presumably, the E.U. will not be included in the talks.
- Such a meeting on Chinese soil will be a big victory for China as it would elevate China’s position in the world.
- From an investment perspective if such a meeting were to occur, in the long term it would be negative for the U.S. and, in turn, U.S. stocks.
- If such a meeting were to occur, the actionable items will be:
- The Arora Protection Band will likely see an increase.
- There will be more diversification into gold, commodities, and international stocks.
- Oil is pulling back on the prospect of President Trump striking a deal with President Putin.
- 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.
France
After weekend riots, French bonds and stocks are coming under pressure. France has been overspending on welfare programs, but politically, it is difficult to pull back on government overspending.
In The Arora Report analysis, prudent investors should pay attention to France because whatever happens in France might be an early indication of things to come in other countries.
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), Alphabet (GOOG), Meta (META), and Nvidia (NVDA).
In the early trade, money flows are neutral in Apple (AAPL), Microsoft (MSFT), and Tesla (TSLA).
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 *** in 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 and bonds are range bound.
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 7739 as of this writing. S&P 500 futures resistance levels are 7795, 7831, and 7900 : support levels are 7733, 7626, and 7541.
DJIA futures are down 148 points.
Gold futures are at $4182, silver futures are at $57.62, and oil futures are at $97.43.
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.
To take a free 30-day trial to paid services to gain access to more opportunities, please click here.
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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.
