By Nigam Arora
To gain an edge, this is what you need to know today.
TACO Traders Meet CAHN
Please click here for a chart of JPMorgan Chase stock (JPM).
Note the following:
- The Morning Capsule is about the big picture, not an individual stock. The chart of JPM stock is being used to illustrate the point.
- The chart shows a rising trendline.
- The chart shows that going into earnings, JPM stock pulled back to the trendline.
- RSI on the chart shows JPM stock has more room to run.
- Expectations going into JPMorgan earnings were very high, but earnings beat the consensus and were inline with whisper numbers.
- JPM is in the ZYX Buy Core Model Portfolio, long from $34.14. It is trading at $307.80 as of this writing in the premarket, representing a 802% gain.
- In addition to JPM, earnings season kicked off this morning with earnings from other banks: Citigroup (C), Wells Fargo (WFC), and Goldman Sachs (GS). All three beat consensus and were inline with whisper numbers.
- TACO (Trump Always Chickens Out) traders were extremely aggressively buying stocks yesterday.
- In The Arora Report analysis, TACO traders are akin to the momo crowd in that they do not do any deep analysis. This morning TACO traders are meeting CAHN (China Always Holds Its Nerve) traders.
- China is not backing down. Here are the key points:
- China has announced new sanctions on five U.S. subsidiaries of South Korea based shipping company Hanwha Ocean.
- China says it will investigate the U.S. investigation into China’s shipping industries.
- China is now collecting additional fees from U.S. cargo ships.
- China has not backed off from its position on rare earth minerals.
- Prudent investors need to remember CAHN. The reason is that China has a long term vision of replacing the U.S. as the world’s superpower. In The Arora Report analysis, China is likely to hold its nerve and try to out fox President Trump in trade negotiations.
- As a result of China’s actions, the three rare earth mineral stocks in the Arora Portfolio are seeing more gains on top of huge gains yesterday. As of this writing in the premarket, Critical Metals (CRML) is up 33%, USA Rare Earth (USAR) is up 13%, and MP Materials (MP) is up 7%.
- JPMorgan’s decision to invest $10B in four different sectors to help the U.S. stay ahead has brought in aggressive buying in many stocks. The most notable are quantum computing stocks such as Rigetti (RGTI), IonQ (IONQ), and D-Wave Quantum (QBTS) and nuclear stocks such as Oklo (OKLO), NuScale Power (SMR), and NANO Nuclear Energy (NNE).
- Advanced Micro Devices (AMD) has scored another big win this morning. Oracle (ORCL) will deploy 50K AMD AI chips starting in Q3 2026. After AMD’s deal with OpenAI, this is a confirmation that Nvidia (NVDA) is likely to get more competition from AMD than previously thought.
- As an actionable item, the sum total of the foregoing is in the Arora Protection Band, which strikes the optimum balance between various crosscurrents. Please scroll down to see the Arora Protection Band. The Arora Protection Band is one of the large number of unique edges that are available to members of The Arora Report.
Magnificent Seven Money Flows
Most portfolios are now heavily concentrated in the Mag 7 stocks. For this reason, to get ahead and get an edge, investors need to dig below the surface of the Mag 7 stocks. It is equally important to rise above the noise of daily news on the Mag 7 stocks. The best way to get an edge, dig below the surface, and rise above the noise of the daily news is to pay attention to early money flows in the Mag 7 stocks on a daily basis. When there is significant news in the Mag 7 stocks that rises above the threshold of noise and impacts your entire portfolio, it is covered in the main section above.
In the early trade, money flows are negative in Amazon (AMZN), Nvidia (NVDA), Microsoft (MSFT), 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 *** (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. Smart money is an important indicator but is only one of hundreds of indicators that go into determining the Arora Protection Band and signals. Please click here and here to understand how signals are generated.
Very Very Short-Term Indicator
The Arora Report’s proprietary 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.
Gold
In The Arora Report analysis, the short squeeze in silver is showing the first signs of ending. This is also bringing in some selling in 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
Oil is seeing selling as U.S. China tensions heat up again.
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 selling.
Arora Protection Band And What To Do Now
It is important for investors to look ahead and not in the rearview mirror. The proprietary Arora Protection Band from The Arora Report is very popular. The Arora Protection Band puts all of the data, all of the indicators, all of the news, all of the crosscurrents, all of the models, and all of the analysis in an analytical framework that is easily actionable by investors.
Consider continuing to hold good, very long term, existing positions. Based on individual risk preference, consider holding *** in cash, Treasury bills, short term fixed income, 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.
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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.
