By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
The Power Of Missile Defense
Please click here for a chart of RTX Corporation stock (RTX).
Note the following:
- The Morning Capsule is about the big picture, not an individual stock. The chart of RTX stock is being used to illustrate the point.
- Yesterday, Iran fired about 180 ballistic missiles on Israel. Israel and the U.S. were able to intercept most of these missiles with missile defense systems. These missiles reached Israel in 12 minutes. The defense was impressive considering there were no fatalities.
- What happened in Israel yesterday shows the power of missile defense systems and illustrates the opportunity for investors in missile defense stocks.
- RTX is The Arora Report’s favorite missile defense stock. RTX is in the ZYX Buy Core Model Portfolio.
- The chart shows that RTX has broken out on the success of missile defense in Israel.
- RTX is a joint developer of the Iron Dome used in Israel. RTX is best known for its Patriot Air And Missile Defense System. RTX also produces several other missile defense systems and aircraft engines.
- RTX entered The Arora Report portfolio when the stock experienced a massive drop on the news of cracks in Pratt & Whitney engines. The Arora Report uses over 50 different strategies. RTX belongs to the strategy of buying a good company where the stock is down due to a fixable technical problem.
- The chart shows the power of Arora buy zones. Buy zones allow investors to buy stocks and ETFs when the probability adjusted risk reward is more favorable. This is one of the keys to members of The Arora Report achieving unrivaled risk adjusted returns over the long term. Risk and reward are two sides of the same coin in investing. Smart money focuses on risk adjusted returns. In contrast, the momo crowd focuses only on rewards – the result is that the momo crowd goes through volatile cycles of making money and losing money, and in the end, accumulating far less than smart money.
- For those following the Good Way, the Buy Now rating on RTX has been yes.
- The chart illustrates the power of a billionaire and hedge fund technique known as a trade around position. A trade around position can dramatically increase profits and reduce risks.
- The chart shows that the RTX trade around position was started at an average of $80.70. The position has over 50% gain as of this writing. The trade around position is separate and distinct from the core position.
- Peace is not about to break out in the world. As such, all investors should consider a defense stock or ETF in their portfolio.
- For those interested in ETFs, the ETF of choice is ITA. The buy zone for ITA is in the ZYX Allocation Model Portfolio. For long time members, the ITA position is nicely profitable.
- ADP is the largest private payroll processor in the country. ADP uses its data to provide a glimpse of the employment picture ahead of the official jobs report that will be released on Friday. ADP employment change came at 143K vs. 120K consensus. This indicates that the jobs picture is staying strong.
- Previously, JOLTS job openings came at 8.04M, higher than expectations.
- ISM Manufacturing Index came at 47.2 vs. 47.4 consensus.
- 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.
Buying Stampede
Stocks are experiencing a once in a century buying stampede in Hong Kong. Stocks in Hong Kong rose 7%. Property developers rose 47%, and broker stocks rose 35%. Hong Kong ETF FXI is in ZYX Emerging.
Magnificent Seven Money Flows
In the early trade, money flows are neutral in Microsoft (MSFT) and Meta (META).
In the early trade, money flows are negative in Amazon (AMZN), Nvidia (NVDA), Alphabet (GOOG), Tesla (TSLA), and Apple (AAPL).
In the early trade, money flows are negative 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.
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 1.458M barrels vs. a consensus of a draw of 2.1M 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 seeing selling along with junk stocks.
Markets
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.
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.
Gold futures are at $2675, silver futures are at $32.13, and oil futures are at $71.91.
S&P 500 futures are trading at 5748 as of this writing. S&P 500 futures resistance levels are 5926 and 6017: support levels are 5748, 5622, and 5500
DJIA futures are up 7 points.
Protection Band And What To Do Now
It is important for investors to look ahead and not in the rearview mirror.
Consider continuing to hold good, very long term, existing positions. Based on individual risk preference, consider holding *** in cash or Treasury bills 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.
