WEEKLY STOCK MARKET DIGEST: AI FRENZY COOLS, TESLA BEARS WIN, STOCK MARKET SENTIMENT AT EXTREME

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By Nigam Arora & Dr. Natasha Arora

Weekly Digest from The Arora Report is popular among serious investors and money managers because they have found studying insights from the prior week gives them an edge over the coming weeks. Here is the day by day rundown from the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers of The Arora Report

Please scroll down for the section ‘Protection Bands and What To Do Now.’

INTEL EARNINGS COOL AI FRENZY, NEW DATA SHOWS EXCESSIVE CONSUMER SPENDING CONTINUES

January 26, 2024

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

AI Frenzy Cools

Please click here for a chart of Intel stock (INTC).

Note the following:

  • The Morning Capsule is about the big picture, not an individual stock.  The chart of INTC is being used to illustrate the point.
  • The chart shows the run up in INTC stock on AI excitement.
  • The chart shows INTC stock made a double top.  This is a bearish reversal pattern.
  • The chart shows the gap down on earnings.
  • Intel earnings were slightly better than expected and guidance was worse than expected.  Here are the details:
    • Intel reported Q4 revenue of $15.4B vs. $15.16B consensus.
    • Intel is projecting Q1 revenue of $12.2B – $13.2B vs. $14.16B consensus.  In The Arora Report analysis, this is a huge miss that is shaking up the stock market.
    • Intel is projecting year-over-year growth each quarter of 2024.
    • Intel’s mission is to “bring AI everywhere.”
  • In The Arora Report, analysis, the previous AI excitement is not yet materializing at Intel.  It will take more time for Intel to see an increase in revenue due to AI.  Super Micro Computer (SMCI), a maker of computers for AI, previously reported great earnings.  AMD earnings are ahead.  It is yet to be seen if other companies can meet the high expectations.  
  • For the time being, Intel earnings have at least temporarily cooled the AI frenzy.
  • The new data shows the consumer continues to spend excessively.
    • Personal income came at 0.3% vs. 0.3% consensus.
    • Personal spending came at 0.7% vs. 0.4% consensus.
  • The Fed’s favorite inflation gauge, PCE, came in as expected.
    • Headline PCE came at 0.2% vs. 0.2%.
    • Core PCE came at 0.2% vs. 0.2%.
  • In The Arora Report analysis, consumer liquidity, especially at the low end, is declining.  It is only a matter of time before excessive consumer spending stops.  However, this is an election year, and the Biden administration is likely to do everything it can with government spending to prop up the consumer prior to the election.  
  • 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.

Magnificent Seven Money Flows

In the early trade, money flows are positive in Amazon (AMZN) and Tesla (TSLA).

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

In the early trade, money flows are negative in  Meta (META), Microsoft (MSFT), and Nvidia (NVDA).

In the early trade, money flows are neutral 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.

Gold

The momo crowd is *** in 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 seeing aggressive buying, causing it to run over $41,000.

Markets

Our very, very short-term early stock market indicator is ***.  Keep in mind today is a Friday, and short squeezes tend to occur on Fridays.  If a short squeeze occurs, it can squeeze the market to the upside.  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 and bonds are range bound.

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 $2024, silver futures are at $22.92, and oil futures are at $76.67.

S&P 500 futures are trading at 4926 as of this writing.  S&P 500 futures resistance levels are 5020, 5210, and 5400: support levels are 4852, 4826, and 4770.

DJIA futures are down 55 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.

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.

 

See also  MOTHER OF ALL REPORTS WILL DETERMINE STOCK MARKET DIRECTION

NEW DATA SHOWS ROBUST ECONOMY, TESLA BEARS WIN ON SLOWING GROWTH

January 25, 2024

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

New Economic Data

Please click here for a chart of Tesla stock (TSLA).

Note the following:

  • The Morning Capsule is about the big picture, not an individual stock.  The chart of TSLA is being used to illustrate the point.
  • TSLA is one of the magnificent seven stocks.
  • The chart shows a gap down on earnings.
  • TSLA reported adjusted EPS of $0.71 vs. $0.74 consensus.  TSLA reported revenue of $25.17B vs. $25.62B.
  • It is not the earnings that is hitting TSLA stock.  It is the projection of slow growth in 2024.
  • At the conference call, Musk talked about a new lower cost model, perhaps costing around $25K.  TSLA bulls are hoping that 2025 talk would overcome slowness in 2024.  However, as of this writing, TSLA bulls are disappointed as bears have taken control of the stock.
  • The chart shows that TSLA stock is now flirting with the bottom band of the support/resistance zone.
  • RSI on the chart shows that TSLA stock is oversold.  Oversold stocks tend to bounce.  In traditional technical analysis, TSLA stock needs to bounce from here, otherwise the calls to exclude it from the magnificent seven will pick up steam.
  • New data on GDP shows that the economy is robust.  Q4 GDP-Adv came at 3.3% vs. 2.0% consensus.
  • In The Arora Report analysis, GDP is stronger than almost anyone expected.  This data again goes against the stock market consensus of six rate cuts starting in March.
  • Durable orders data also shows strength.
    • Durable orders came at 0.0% vs. 0.1% consensus.
    • Durable goods ex-transportation came at 0.6% vs. 0.2% consensus.
  • Initial jobless claims came at 214K vs. 200K consensus.  This series is very volatile.  In The Arora Report analysis, we look at the three month moving average.  The data shows that the employment picture is strong.
  • The Fed’s favorite inflation gauge, PCE, will be released tomorrow at 8:30am ET.  PCE may be market moving.
  • 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.

European Central Bank

The European Central Bank (ECB) is keeping its key interest rate at 4%.  Just like in the U.S., the stock market in Europe is hoping for quick rate cuts.  ECB is pushing against market expectations.

Magnificent Seven Money Flows

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

In the early trade, money flows are negative in Tesla.

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.

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

Houthis are claiming a successful hit on a U.S. warship.  This is driving oil prices higher.

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

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 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 $2020, silver futures are at $23.01, and oil futures are at $75.97.

S&P 500 futures are trading at 4917 as of this writing.  S&P 500 futures resistance levels are, 5020, 5210, and 5400: support levels are 4852, 4826, and 4770.

DJIA futures are up 84 points.

 

AI DRIVEN DEMAND FOR EXTREME ULTRA LITHOGRAPHY AND CHINA DRIVE STOCK MARKET HIGHER

January 24, 2024

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

Artificial Intelligence

Please click here for a chart of ASML stock (ASML).  ASML is on The Arora Report’s list of AI stocks to watch.  Please click here for the full list of 18 stocks to make a fortune from artificial intelligence.

Note the following:

  • The Morning Capsule is about the big picture, not an individual stock.  The chart of ASML is being used to illustrate the point.
  • ASML is a Dutch company and is the largest provider of extreme ultra lithography equipment for semiconductor manufacturing.
  • Think of a chain – Nvidia (NVDA) designs AI chips, Taiwan Semiconductor (TSM) manufactures AI chips, and TSM needs equipment from ASML and AMAT to manufacture the chips.
  • The chart shows the gap up on earnings.
  • The chart shows a resistance zone is ahead.  The ZYX Change Method is close to giving a signal on ASML, but the criteria is not yet met.
  • ASML reported blowout earnings and is very bullish in its commentary.  Here are the details:
    • Earnings came at €5.21 per share vs. €4.76 per share consensus.
    • Revenues came at €7.24B vs. €6.68B consensus.
    • Revenue increased 30% year-over-year.
    • Significant growth is expected in 2025.  2024 will be a year of preparation for growth.
  • The other key player is Applied Materials (AMAT).  AMAT is in the ZYX Buy Model Portfolio.  Long time members of The Arora Report have huge gains on AMAT,   long from $16.  AMAT is trading at $171.31 as of this writing, representing a 971% gain.
  • We shared with you yesterday that China has a $279B program to boost stocks.  Today, China is taking additional steps to help stocks.
    • China is reducing the bank reserve requirement ratio by 0.5% on February 5.  The move is estimated to add $139B in liquidity.  This cut follows two cuts in 2023.
    • People’s Bank of China is also reducing ratings and adjusting policies to boost the agricultural sector and property development.
    • There are reports that additional support measures are ahead.
  • In The Arora Report analysis,  the moves by China are boosting stocks in many sectors across the globe.  Prominent among the stocks being boosted are semiconductor stocks, copper stocks, and iron stocks.   
  • 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  WEEKLY STOCK MARKET DIGEST: CAN STOCK MARKET BULLS’ HOPIUM BE QUENCHED?

Layoffs

SAP (SAP) is the largest European software company with major presence in the U.S.  It is accelerating AI development, and as a result, laying off 8,000 people.

Magnificent Seven Money Flows

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

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.

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 6.674M barrels vs. a consensus of a draw of 3M 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) bulls bought the dip, briefly running bitcoin over $40,000.  When bitcoin went above $40,000, selling came in.

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 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 $2035, silver futures are at $22.98, and oil futures are at $75.03.

S&P 500 futures are trading at 4919  as of this writing.  S&P 500 futures resistance levels are 5020, 5210, and 5400: support levels are 4826, 4440, and 4713.

DJIA futures are up 133 points.

 

MONEY FLOWING INTO JAPANESE AND INDIAN STOCKS, CHINA TO SUPPORT ITS STOCK MARKET WITH $279B, BITCOIN BELOW $40K

January 23, 2024

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

Continue To Take Profits

Consider continuing to take advantage of the strength and slowly book profits on tactical positions. Consider continuing to hold strategic positions.

The plan is to buy again to rebuild tactical positions on a dip.

In addition to taking profits, there are opportunities to buy.  Please see recent posts.  New members who are under invested may consider focusing on the Model Portfolios.

Lesson From Japan For Prudent Investors

Please click here for a 42 year chart of Nikkei 225 Index.

Note the following:

  • Money is flowing into Japanese and Indian stocks.  Money is beginning to flow out of U.S. stocks.
  • The Japanese stock market offers a highly valuable lesson for prudent investors.
  • In the 1980’s, Japanese investors had the same mindset that U.S. investors currently have.
  • Japanese investors had become big buy and hold investors.  They were very optimistic about the future of Japan’s stock market, convinced it would go higher.
  • The chart shows on December 29, 1989, Nikkei 225 hit an all time high of 38,957.44.
  • The chart shows 20 years later Nikkei 225 dropped 81.9% to 7,054.98 on March 10, 2009.
  • The chart shows that now, 15 years later, Nikkei 225 is finally over 36,500.  Even after 35 years, the Japanese stock market has not yet eclipsed its old high.
  • The chart shows Nikkei 225 is approaching its all time high.  In The Arora Report analysis, Nikkei 225 is likely to go higher because money is flowing into Japanese stocks.
  • Prudent investors need to remember the Nikkei 225 lesson.  It can not be ruled out that the same thing could happen in the U.S. stock market for the following reasons:
    • National debt is at $34T and growing quickly. 
    • There is a $1.5T budget deficit.
    • Both parties want to borrow and spend.
  • The lesson for investors is to be neither a permabull nor a permabear, but instead to invest based on the hard data.
  • The Arora Report’s choice ETF to invest in Japan is EWJ.  See the ZYX Allocation Model Portfolio for the Buy Now rating, buy zone, and allocation.
  • There is also a position in Japanese currency ETF FXY in ZYX Allocation Model Portfolio.
  • The Indian stock market has just become the fourth largest stock market in the world.  ZYX Emerging is a rare service that has followed India continuously for 17 years.  There are three Indian ETFs in the ZYX Emerging Model Portfolio to give you full spectrum exposure to India.  In ZYX Buy, there is FFXDF – an India focused fund that is run by the Warren Buffett of Canada and trades in the U.S.
  • The Chinese government has just stepped up to support the Chinese stock market with $279B.  
  • In the U.S. market, several important earnings have just been released.  They are mixed, disappointing the bulls.
  • 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.

Magnificent Seven Money Flows

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

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

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 *** in 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 *** in oil in the early trade.  Smart money is *** in the early trade.

For longer-term, please see oil ratings.

Bitcoin

Bitcoin (BTC.USD) has fallen below $40,000 as whales continue to take advantage of retail investors.

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.

See also  STOCKS IN CHINA FLYING, LIFTING SENTIMENT IN STOCK MARKETS ACROSS THE GLOBE, AI AND WEIGHT LOSS DRUGS GET HOTTER

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 $2026, silver futures are at $22.44, and oil futures are at $73.67.

S&P 500 futures are trading at 4887 as of this writing.  S&P 500 futures resistance levels are 4918, 5020, and 5210: support levels are 4852, 4826, and 4770.

DJIA futures are down 80 points.

 

S&P 500 MAGNET IS 5000 BUT SENTIMENT MAY GET IN THE WAY, IMPORTANT EARNINGS AHEAD

January 22, 2024

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

Important Earnings Ahead

Please click here for a chart of S&P 500 ETF (SPY) which represents the benchmark stock market index S&P 500 (SPX).

Note the following:

  • The chart shows the stock market has broken to a new high.
  • The chart shows the support zone.
  • RSI on the chart shows that the stock market is overbought, but the pattern is such that the stock market can go either way.
  • For bullish traders, S&P 500 going to 5000 is the magnet, but sentiment may get in the way.
  • Sentiment has reached extreme positive.  Here are the key points:
    • At extremes, sentiment is a contrary signal.  In plain English, this means that when sentiment reaches extreme positive it is a sell signal.
    • Sentiment is not a precise timing indicator.  For this reason, investors should do a comprehensive 360 degree analysis using a proven system with a long track record, such as the adaptive ZYX Asset Allocation model with inputs in ten categories.
    • Sentiments tend to fluctuate quickly.
    • Positive sentiment tends to result in selling mostly when it stays at the extreme for a few days.
  • S&P 500 has made a new high after 511 days after experiencing a 25% bear market.  Based on the historical precedent, this pattern tends to produce 10% – 13% positive returns over the next 12 months.  It is important to know historical patterns as a reference point, but no investor should rely on them.  Prudent investors rely on new data as it comes in.
  • There are important earnings ahead that will determine the course of the stock market.  Important earnings this week include IBM, TSLA, NFLX, INTC, T, LVS, V, TMUS, AXP, and CAT.
  • Leading economic index will be released at 10am ET and maybe market moving.
  • 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.

Magnificent Seven Money Flows

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

In the early trade, money flows are negative in 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.

Gold

The momo crowd is *** in 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 holding above $40,000.  Bitcoin bulls are disappointed that whales did not run up bitcoin over the weekend, taking advantage of the low liquidity.  However, those who know the whales’ secrets knew beforehand that the probability of whales buying bitcoin over this weekend was low.  

For those who are serious about generating profits in bitcoin, both from the long side and the short side, it is imperative to understand the whales’ secrets.  These secrets are not publicly available in a synergistic fashion.  The best place to learn these secrets is from the podcast series “Whales’ Secrets You Need To Know: Capturing Bitcoin Profits.”  Part 2 of the series is now live in Arora Ambassador Club, and we are working on part 3. 

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 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 $2023, silver futures are at $22.05, and oil futures are at $73.73.

S&P 500 futures are trading at 4883  as of this writing.  S&P 500 futures resistance levels are 4918, 5020, and 5210: support levels are 4826, 4770, and 4713.

DJIA futures are up 108 points.

 

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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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