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.’

NEW MOMO GURU MANTRA POST NVIDIA, TWO NEW PIECES OF HIGHLY CONCERNING DATA

Aug 29, 2024

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

Momo Gurus Shift

Please click here for a chart of Nvidia stock (NVDA).

Note the following:

• The Morning Capsule is about the big picture, not an individual stock.  The chart of NVDA is being used to illustrate the point.
• The chart shows when Nvidia earnings were released.
• The chart shows after initial volatility, the stock fell.
• The chart shows when the conference call started.
• The conference call was very positive.
• The chart shows that NVDA stock continued to fall as the conference call progressed, even though the conference call was very positive.
• The after market trading on major ECNs stopped at 8pm ET.  After 8pm, some brokers allow trading via private networks.  As soon as trading shifted to private networks, aggressive buying came in NVDA.
• The chart shows overnight buying lifted NVDA stock.
• The chart shows buying has continued in the premarket this morning.
• The VUD indicator is the most sensitive measure of net supply demand in real-time. The orange represents net supply and the green represents net demand.
• The chart shows that the VUD indicator has been orange, indicating a net supply of NVDA stock.
• Here are the key points from Nvidia earnings:
  • NVDA earnings and revenues came above the consensus but slightly less than the whisper numbers.
  • NVDA guidance is above the consensus but slightly less than the whisper numbers.
  • There is concern about Blackwell mask change.  The stock fell primarily on Blackwell mask change.  In The Arora Report analysis, the purpose of the mask change is to improve production yield, and this is not a negative in the short term; it is a positive in the long term.
  • In The Arora Report analysis, a big positive is that NVDA plans to ship billions of dollars of Blackwell chips in the fourth quarter.
  • The stock was hit on momo crowd selling.  The momo crowd does not do much analysis.  They sold because the stock was not running up after earnings as they had expected when they were buying before earnings.
• The reaction to NVDA earnings again demonstrates what we have been sharing with you all along – stocks move based on the difference between reported numbers and the whisper numbers.  It is important that investors have access to analysis based on whisper numbers.  Such analysis with a good track record is extremely hard to come by.
• After NVDA earnings, momo gurus’ new mantra is taking hold.  Remember, momo gurus are very influential, but their real job is to run up stocks under the disguise of analysis.  Momo gurus’ new mantra is dumb money was buying NVDA before earnings, ignore NVDA, and buy stocks because rate cuts are coming.
• There are two new pieces of highly concerning data that prudent investors should pay attention to, but the momo crowd is oblivious.
  • Dollar General (DG) caters to very low end consumers.  DG stock is crashing about 25% in the premarket as the company’s customers are coming under intense pressure.   
  • Wages are falling in about 40% of major U.S. cities.
• Initial jobless claims came at 231K vs. 230K consensus.  The market is taking this data as a positive.
• Q2 GDP – Second Estimate came at 3.0% vs. 2.8% consensus.  The market is taking this data as a positive.
• 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.

Magnificent Seven Money Flows

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

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

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) in 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 *** 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 range bound.

Markets

Our very, very short-term early stock market indicator is positive but can quickly turn ***.  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 $2543, silver futures are at $29.82, and oil futures are at $75.14.

S&P 500 futures are trading at 5625 as of this writing.  S&P 500 futures resistance levels are 5748 and 5926: support levels are 5500, 5400, and 5256.

DJIA futures are up 255 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.

BLACKWELL GUIDANCE IS THE KEY TO NVIDIA AND STOCK MARKET, WHALES SELL BITCOIN – RUSSIA TO COMPETE

Aug 28, 2024

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

Blackwell Guidance Is The Key

Please click here for a chart of Nvidia stock (NVDA).

Note the following:

• The Morning Capsule is about the big picture, not an individual stock.  The chart of NVDA stock is being used to illustrate the point.
• In the history of the stock market, there has seldom been a stock like NVDA.  Nvidia earnings will determine the near term course of the stock market.
• The chart shows that NVDA stock staged a major rally after touching the low band of the support zone.
• The chart shows that over the last few days NVDA stock has been consolidating.
• The chart shows the consolidation has been on average volume, indicating that there is not strong conviction ahead of earnings.
• The options market indicates a tilt towards buying.
• The Arora Report’s proprietary VUD indicator measures net supply and demand in real time.  Going into earnings, the VUD indicator for NVDA is mixed.
• RSI on the chart shows that NVDA stock can easily go in either direction.
• The momo crowd is aggressively buying NVDA stock.  The belief among the momo crowd is that NVDA will go to $150 after earnings.
• Institutions and hedge funds continue to trim NVDA ahead of earnings.  They are not trimming because they are negative on NVDA.  They are trimming because they know that earnings is a risk event.  Smart money tends to reduce risk ahead of events.  In contrast, the momo crowd buys ahead of events because the momo crowd is fixated on the possible rewards and ignores the risks.
• As we have been sharing with you, whisper numbers for Nvidia earnings continue to ratchet up.  Whisper numbers are higher than consensus.
• Stocks move based on the difference between the reported numbers and whisper numbers. Whisper numbers are the numbers that analysts privately share only with their best clients.  Whisper numbers from the same analysts are often quite different from the numbers they publish for public consumption. Whisper numbers is a technique used by analysts to drum up business.
• Previously we shared with you that Nvidia was expecting significant Blackwell revenues this year.  Blackwell is the next generation system from Nvidia.
  • In large part, the drop in NVDA stock shown on the chart from the highs was related to the potential delay in Blackwell shipments.
  • The rally in NVDA stock shown on the chart is in part due to analysts defending Nvidia and a building consensus that the delay is only for four to six weeks.
• In The Arora Report analysis, what happens to NVDA stock and the stock market, in large part, will depend on Nvidia’s guidance on Blackwell shipments.  
• The options market is implying about a 10% move in either direction after Nvidia earnings, compared to the prior 9%.  Such a move will mean value creation or value destruction of about $300B.
• 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.

Magnificent Seven Money Flows

In the early trade, money flows are neutral in NVDA, Amazon (AMZN), 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 negative in S&P 500 ETF (SPY) and Nasdaq 100 ETF (QQQ).

Momo Crowd And Smart Money In Stocks

The momo crowd is *** 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 *** in 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 3.4M barrels vs. a consensus of a draw of 3M barrels.

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 seen a significant sell off as bitcoin whales unload bitcoin to retail investors.  As is their pattern, bitcoin whales tend to sell bitcoin into the strength generated by retail buying.

There are three other developments negatively impacting bitcoin.

• Telegram is a messaging app that is popular among bitcoin users.  French authorities have arrested Pavel Durov, the Russian born founder of Telegram.  France is investigating criminal activities on the app.
• A bitcoin rival toncoin has crashed.  The reason for the toncoin drop is that toncoin is linked to Telegram.
• The third reason is a leak that Russia is getting ready to set up crypto exchanges.  Russia’s intention is to use bitcoin to circumvent U.S. sanctions.

Both Trump and Harris are showing enthusiasm for crypto to garner votes from single issue voters – these are crypto bulls.  In The Arora Report analysis, the concern is that when elected the new president will not support crypto due to the Russia development.

Those serious about making money from bitcoin need to understand the secrets of bitcoin whales.  To learn bitcoin whales’ secrets, listen to the podcast titled “WHALES’ SECRETS YOU NEED TO KNOW: CAPTURING BITCOIN PROFITS.” The podcast is available in Arora Ambassador Club.

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 and bonds are range bound.

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 $2536, silver futures are at $29.39, and oil futures are at $74.75.

S&P 500 futures are trading at 5643 as of this writing.  S&P 500 futures resistance levels are 5748 and 5926: support levels are 5622, 5500, and 5400.

DJIA futures are down 19 points.

DOW JONES HITS ALL TIME HIGH BUT SEMICONDUCTORS AND AI STOCKS GET HIT AHEAD OF NVIDIA EARNINGS

Aug 27, 2024

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

Rotation

Please click here for a chart of Dow Jones Industrial Average ETF (DIA).

Note the following:

• The chart shows the Dow Jones Industrial Average (DJIA) broke out to a new all time high.
• The chart shows that the breakout is not convincing.
• RSI on the chart shows that DJIA is overbought.  An overbought index tends to be vulnerable to a pullback.
• The chart shows that volume is not heavy on the breakout to a new all time high.  This indicates a lack of conviction.
• The reason behind the breakout in DJIA is that a rotation is taking place into cyclical and interest rate sensitive stocks and away from tech stocks.
• Prudent investors should note as DJIA hit a new all time high, AI and semiconductor stocks were being hit.
  • In The Arora Report analysis, this rotation is especially noteworthy because the momo crowd is aggressively buying AI and semiconductor stocks ahead of Nvidia (NVDA) earnings.
  • Nvidia reports earnings tomorrow after the close.
• In The Arora Report analysis, aggressive buying by the momo crowd in NVDA and other AI stocks is being countered with selling from hedge funds and institutions.  Prudent investors should note that it is not that hedge funds and institutions are negative on Nvidia.  It is that they represent smart money.  Smart money knows that Nvidia earnings is a risk event.  The risk is both to the upside and the downside.  As we have been sharing with you over the years, smart money tends to reduce risk ahead of events.  In contrast, the momo crowd buys ahead of events because the momo crowd always has stars in their eyes and does not take risk into account.
• The options market is pricing in a 9% move after Nvidia earnings.
• The widespread belief among the momo crowd is that NVDA stock will go above $150 after the earnings.  Such a move will represent about a 20% upside move.
• Nvidia is long from $12.55 in The Arora Report ZYX Buy Model Portfolio.  This represents a gain of 896%. For analysis on what to do with NVDA stock, please read the separate post on NVDA in ZYX Buy dated August 21.
• The foregoing illustrates the need for optimum diversification.  The easiest way to reach the optimum diversification is to follow The Arora Report Model Portfolios.  You get the best results when you combine ZYX Buy, ZYX Allocation, ZYX Emerging, and positions in ZYX Short.  The combination provides the optimum diversification by stocks and ETFs, asset classes, geography, strategy, time frame, and protection.
• Consumer confidence will be released at 10am ET and 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. The protection band is one of the large number of unique edges that are available to members of The Arora Report.

Germany

The German economy is no longer expanding.  Germany is Europe’s largest economy.

Germany’s Q2 GDP contracted by 0.1% vs. 0.1% contraction consensus.

China

China is determined to become the world leader in autonomous vehicles.  China has just issued 16,000 license plates for testing autonomous vehicles on designated public roads.

For investors, autonomous driving is the next big opportunity.

Magnificent Seven Money Flows

In the early trade, money flows are neutral in Microsoft (MSFT).

In the early trade, money flows are negative in Amazon (AMZN), Nvidia (NVDA), Alphabet (GOOG), Meta (META), 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 *** 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 a pullback along with speculative and 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 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 $2545, silver futures are at $29.90, and oil futures are at $76.65.

S&P 500 futures are trading at 5618 as of this writing.  S&P 500 futures resistance levels are 5622, 5748, and 5926 : support levels are 5500, 5400, and 5256.

DJIA futures are down 75 points.

PAY ATTENTION TO PROTECTING YOUR WEALTH, TROUBLE IN LIBYA IMPACTS THE U.S.

Aug 26, 2024

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

Protect Your Wealth

Please click here for a chart of U.S. dollar index (USDX, DX, DXY).

Note the following:

• Investors need to pay attention to the dollar to protect their wealth if their wealth is in dollars or tied to the dollar.
• The chart is a weekly chart to give you a longer term perspective.
• The chart shows the dollar is at the top band of the support zone.
• The chart shows the dollar made a double top.  This is a negative pattern.
• RSI on the chart shows the dollar is oversold, which could lead to a bounce in the short term.
• The chart shows that if the support zone is broken, there is significant room for the dollar to fall.
• The U.S. owes its economic prosperity and its status as the sole superpower in large part to the dollar being the world’s reserve currency.
  • Most of the world’s trade is conducted in dollars.
• China is determined to replace the U.S. as the world’s sole superpower.  The Chinese and Russian governments understand that the key to achieving their objectives is to weaken the dollar and replace the dollar as the reserve currency.
  • China and Russia have accelerated their attacks on the U.S. dollar.  They have the support of BRICS.  BRICS is a bloc that has consisted of Brazil, Russia, India, China, and South Africa.  Six more countries have joined the BRICS bloc.  The new countries are Iran, Egypt, Ethiopia, Argentina, Saudi Arabia, and U.A.E.
• All investors should take steps to protect their wealth.  Investors should consider emerging markets, other developed markets, currencies when appropriate, gold, commodities, and commodity producers including metal producers.
  • The easiest way to accomplish your objective is to look at The Arora Report’s Model Portfolios in ZYX Allocation and ZYX Emerging.
• The world is interconnected.  Oil prices are jumping about 3% this morning on trouble in Libya. Libya is a divided country with two rival governments – Tripoli based government and Benghazi based government.  The Benghazi government has shut down all crude oil exports.  This is in response to the Tripoli based government replacing the leadership of the central bank.
  • Many media headlines are wrong in claiming that oil prices are jumping on Israel conducting a preemptive attack on Lebanon on Sunday and Hezbollah responding.  The conflict between Israel and Hezbollah has no direct impact on oil unless Iran directly gets involved. So far, Iran has not been directly involved.
  • The real reason oil prices are jumping is coming from Libya.
• Investors need to pay attention to oil prices because one of the reasons behind inflation coming down is the lower price of oil.  The Fed is planning to cut rates because of lower inflation.  The stock market has been going up on hopes of a rate cut.  If the price of oil shoots up, inflation will rise, limiting the Fed’s ability to cut rates.  Such a scenario will be negative for the stock market, which is trading at a very high valuation.   
• Durable goods data is mixed.
  • Durable Orders came at 9.9% vs. 4.0% consensus.
  • Durable Orders Ex-Transport came at -0.2% vs. 0.1% 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.

Magnificent Seven Money Flows

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

In the early trade, money flows are negative in Amazon (AMZN), 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 *** 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 approaching $64,000.  The recent rise has rekindled hopes of bitcoin making a new high and then going to $100,000.

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 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 $25460, silver futures are at $29.86, and oil futures are at $77.28.

S&P 500 futures are trading at 5661  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 73 points.

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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.