HEDGES ARE PROFITABLE, SEMICONDUCTORS STABILIZING AFTER 17% DROP

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By Nigam Arora & Dr. Natasha Arora

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

Hedges Are Profitable

There have been several hedges put on to protect large profits that The Arora Report members currently have.  Hedges are now profitable.  It is time to book partial profits on some hedges.  There will be a separate post.  Also, there is a change to the protection band.  Please see the protection band section below.

Semiconductors Stabilizing After 17% Drop 

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

Note the following:

  • Historically, semiconductors are the leading sector.  Often semiconductors move first and then the rest of the market follows.
  • This time, there has been an additional factor – semiconductors have been at the center of the AI revolution.
  • The chart shows semiconductors have had a massive run, producing large profits for members of The Arora Report.  The ZYX Allocation Core Model Portfolio has the largest allocation to semiconductors, up to 16% of the portfolio.
  • The chart shows when the Arora signal was given to take partial profits close to the top.
  • The chart shows semiconductors dropped 17% from the top.
  • The chart shows semiconductors are attempting to stabilize at the microsupport zone.
  • The chart shows RSI is oversold.  Oversold RSI often, but not always, leads to a bounce.
  • Among the earnings, there are two notable earnings.
    • General Motors (GM) reported earnings significantly better than the whisper numbers.  This indicates that in spite of high interest rates, consumers feel secure enough to buy new cars.
    • Cadence Design Systems (CDNS) is a leading provider of semiconductor design software.  CDNS stock has run up due to the AI frenzy.  The presumption has been that as chips become more complex, CDNS will benefit.  CDNS guidance is below expectations.  This indicates that the momo crowd euphoria about AI is overdone.  CDNS is one of 18 stocks on the Arora Artificial Intelligence List.  Stay tuned for a potential buy signal at the appropriate time.  Such a signal will be in ZYX Buy.
  • In the short term, the course of the stock market will depend on earnings from Tesla (TSLA), Meta (META), Microsoft (MSFT), and Alphabet (GOOG, GOOGL).
  • 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.
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Magnificent Seven Money Flows

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

In the early trade, money flows are neutral in Apple (AAPL).

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.

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

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.  Bitcoin bulls are disappointed that bitcoin is not running up immediately after the halving.  Of course, those who listened to the podcast from Arora Ambassador Club titled “BITCOIN HALVING – SIX SECRETS WHALES DO NOT WANT YOU TO KNOW” knew in advance that bitcoin was not likely to run right after the halving.

For more on profiting from bitcoin and bitcoin whales’ 22 secrets, listen to the podcast series titled “WHALES’ SECRETS YOU NEED TO KNOW: CAPTURING BITCOIN PROFITS” in Arora Ambassador Club.  To get on the waitlist to join the club, please click here to fill out the form.

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.

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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.

Gold futures are at $2324, silver futures are at $27.10, and oil futures are at $81.30.

S&P 500 futures are trading at 5064 as of this writing.  S&P 500 futures resistance levels are 5210, 5256, and 5400: support levels are 5020, 4918, and 4852

DJIA futures are up 123 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.

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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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Picture of 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.

Picture of 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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