PRUDENT INVESTORS WATCHING SEMICONDUCTORS FOR A SIGN OF A PULLBACK, GOLD HITS ALL TIME HIGH

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By Nigam Arora & Dr. Natasha Arora

To gain an edge, this is what you need to know today.

Watch Semiconductors

Please click here for a chart of semiconductor ETF (SMH).

Note the following:

  • Semiconductors are a leading indicator and at the heart of the AI revolution.
  • The chart shows there is a 62% gain on semiconductors from the Arora buy zone.
  • The pattern shown on the chart often precedes a pullback.
  • If semiconductors pullback, the rest of the stock market will also likely pullback, as semiconductors tend to lead.
  • The chart shows the support zone.
  • As long as semiconductors stay above the support zone, the long term trend is intact.
  • Semiconductor ETF SMH has been the largest position in the ZYX Allocation Core Model Portfolio, with up to 16% allocation.
  • At The Arora Report, our two most favorite individual semiconductor stocks are Nvidia (NVDA) and Applied Materials (AMAT).  Both of these stocks are in the ZYX Buy Core Model Portfolio.  Other notable semiconductor stocks in the ZYX Buy Portfolio are NXP Semiconductors (NXPI), Qualcomm (QCOM), Micron (MU), and Analog Devices (ADI).   Among semiconductor stocks on our radar to buy are ASML (ASML), ARM (ARM),  AMD (AMD), and Intel (INTC).
  • For more details, including buy zones, on all of these semiconductor stocks and semiconductor ETF SMH, please see separate posts.
  • AMD stock is pulling back on the news that the U.S. is blocking AMD from exporting weaker AI chips to China.
  • Apple (AAPL) is a very important company for the stock market.  There is more bad news on Apple.  A wave of patriotism and a great phone from Huawei has caused Apple’s market share in the Chinese market to fall below 16% from about 20% previously.  There is selling in AAPL stock this morning as this is a surprise to many investors.  Of course, as a member of The Arora Report, you knew this in advance months ago, when we shared with you in several posts the details of the Huawei phone and the Chinese government banning the use of the iPhone in government agencies.
  • Gold has broken out to a new high on hopes of an interest rate cut.  Gold ETF GLD (GLD) is in the ZYX Allocation Core Model Portfolio.  Silver ETF SLV (SLV) and gold miner Newmont (NEM) along with buy zones are in ZYX Buy Model Portfolio.
  • The stock market is waiting for Powell’s testimony in front of Congress tomorrow.
  • 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.
See also  PRUDENT INVESTORS PAY ATTENTION TO THE EXTRAORDINARY TREASURIES’ MOVE – MOMO OBLIVIOUSLY BUYS STOCKS

China

China is targeting GDP growth of 5%.  This is inline with expectations.  There are serious doubts if China will be able to meet this ambitious goal.

Prices of goods produced in China continue to fall.  This will help reduce goods inflation in the U.S.

Magnificent Seven Money Flows

In the early trade, money flows are positive in NVDA.

In the early trade, money flows are negative in Amazon (AMZN), Microsoft (MSFT), Alphabet (GOOG), Meta (META), Tesla (TSLA), and 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.

Gold

The momo crowd is *** in the early trade.  Smart money is *** in the early trade.

For longer-term, please see gold and silver ratings.

Oil

The momo crowd is *** in the early trade.  Smart money is *** in the early trade.

For longer-term, please see oil ratings.

Bitcoin

Bitcoin (BTC.USD) is trading over $68,000, near the all-time high on excitement about the upcoming bitcoin halving.  Highly misleading information about bitcoin halving is being extensively spread to run up bitcoin.  It is important to not fall prey to the widespread misinformation.  Many investors are finding the podcast titled “Bitcoin Halving – Six Secrets Whales Do No Want You To Know” to be an eye opener.

See also  AGGRESSIVE BUYING IN SILVER AS POWELL ITCHING TO CUT RATES

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 down, and bonds are ticking up.

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.

Gold futures are at $2134, silver futures are at $24.18, and oil futures are at $78.05.

S&P 500 futures are trading at 5116 as of this writing.  S&P 500 futures resistance levels are 5210, 5400, and 5500 : support levels are 5020, 4918, and 4852.

DJIA futures are down 133 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.

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.

See also  NEW DATA POINT SHOWS INSATIABLE DEMAND FOR AI CHIPS BUT CHART SHOWS BROADENING TOP PATTERN

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 seven 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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This post was just published on ZYX Buy Change Alert.

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Nigam Arora

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

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.

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