SILVER IS THE NEW AI PLAY – TRADER MAGNET IS MUCH HIGHER, FED WEEK

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By Nigam Arora & Dr. Natasha Arora

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

Silver Is The New AI Play

Please click here for a chart of silver ETF (SLV).

Note the following:

  • The chart is a monthly chart to give you the long term perspective.
  • In The Arora Report analysis, silver has the potential to become an AI play.  
    • Silver is extensively used in electronics that go into AI data centers.
    • AI data centers are power hungry.  Some data centers are being built next to huge solar farms.  Silver is used in solar cells.  First Solar (FSLR) is the leader in utility scale solar farms.  First Solar is in the ZYX Buy Core Model Portfolio.
  • Silver also moves with gold.  We have previously shared with you that gold has hit a new high.
  • The chart shows that silver is far from a new high.
  • The chart shows the resistance zone.  If the resistance zone is broken, silver can go much higher.
  • The chart shows the trader magnet for silver.
  • RSI on the chart shows that silver is overbought.  Overbought commodities tend to pullback.
  • In The Arora Report analysis, Wall Street positioning in silver is very low.  This can lead to an explosive up move once the move starts going.  Positioning is an important Wall Street mechanic.  Investors who learn Wall Street mechanics gain important edges.  It is difficult to learn the nuances of Wall Street mechanics because Wall Street professionals keep these nuances close to the chest due to their very high value.  The best way to learn Wall Street mechanics is to listen to the podcasts in Arora Ambassador Club.  To join the waitlist, please click here to fill out the form.
  • The move in silver will come down to three factors:
    • If the Fed lowers rates by 25 bps or 50 bps
    • How gold reacts to the Fed
    • Does a short squeeze start in silver?  In The Arora Report analysis, silver is prone to short squeezes.  
  • The move in silver in 2021 was the result of silver becoming a meme crowd favorite and the resulting short squeeze.
  • The Arora Report record on silver is unrivaled.
    • The chart shows that The Arora Report gave a back up the truck and buy silver signal when silver was in the $17 range. The Arora Report gave a sell signal on silver hours before silver peaked.  The chart shows that was one of the most remarkable calls ever made.
    • Not only that, right at the peak around $50, The Arora Report gave a signal to short sell signal and gave a target for silver to fall to $34 in a matter of weeks.  The chart shows that was another highly remarkable, spot on call.
  • The Arora Report gold and silver ratings are used across the globe by individual investors, hedge funds, institutions, bullion dealers, and jewelers.
  • Silver ETF SLV is in ZYX Buy Core Model Portfolio.  There will be a new post with a new buy zone.
  • Last week a big weekly reversal occurred in S&P 500.  Last week was one of the best weeks.  The prior week was one of the worst weeks.  Since 1957, there have been 10 such reversals when the stock market was near a high.  S&P 500 has been higher an average of 5.2% over the next three months 90% of the time.
  • Apple stock (AAPL) is falling today after Ming-Chi Kuo said that demand for the iPhone 16 is lower than expected.  In the past, analysis from Ming-Chi Kuo has almost always proven spot on.
  • This is a Fed week.  FOMC will announce its decision at 2pm ET on Wednesday.
  • In the early trade, the momo crowd is buying, but some selling is coming in tech stocks on Ming-Chi Kuo’s report.
  • 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.
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Magnificent Seven Money Flows

In the early trade, money flows are neutral in Meta (META), Amazon (AMZN), and Alphabet (GOOG).

In the early trade, money flows are negative in AAPL, Microsoft (MSFT), Nvidia (NVDA), and Tesla (TSLA).

In the early trade, money flows are positive in S&P 500 ETF (SPY) and negative in 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

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

For longer-term, please see oil ratings.

Bitcoin

Bitcoin (BTC.USD) is seeing light selling.

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 $2612, silver futures are at $31.35, and oil futures are at $70.29.

S&P 500 futures are trading at 5685 as of this writing.  S&P 500 futures resistance levels are 5748 and 5926: support levels are 5622, 5500, and 5400.

DJIA futures are up 98 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.

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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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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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