By Nigam Arora
To gain an edge, this is what you need to know today.
Iran Breakthrough
Please click here for a chart of leveraged semiconductor ETF (SOXL).
Note the following:
- The trendline on the chart shows an extraordinarily steep rise in leveraged semiconductor ETF (SOXL). The ETF has moved from a low of around $40 to $107.06 as of this writing in the premarket. This is a 168% rise in a very short time.
- The chart shows that RSI is at 100, the most overbought it can be.
- The momo crowd continues to pile into SOXL. The reason is that semiconductors are not impacted by the Iran war.
- In addition to the momo crowd, the meme crowd is also piling into SOXL.
- For prudent investors, SOXL provides an important indication of the extreme positive sentiment.
- As a member of The Arora Report, you have been ahead of the curve. We have been sharing with you for a while that software stocks have a structural problem due to AI. Software ETF IGV has staged a major bounce from the lows. Now, there is another setback. ServiceNow (NOW), a major software stock, reported good earnings after the market close, but the stock has experienced significant selling so far due to lower margins. The market is interpreting it as AI hurting software stocks instead of helping software stocks.
- Tesla (TSLA) reported good earnings after the market close. Initially, TSLA stock went higher but pulled back when CEO Elon Musk said capex will surge to $25B. The reveal of humanoid robot Optimus 3 is now scheduled for the second half of 2026.
- Intel (INTC) finally has a customer for its 14A process. The customer is Musk’s Terafab. INTC stock jumped on the news. INTC stock has been ripping lately. Intel will report earnings after the market close. Investors should carefully watch to see if the optimism is justified. INTC is in ZYX Buy in the portfolio that surrounds the Core Model Portfolio. INTC is long from an average of $19.05. It is trading at $66.45 as of this writing in the premarket. This represents a gain of 249%.
- As of this writing, significant buying is coming into the stock market on a report that there might be a breakthrough with Iran.
- Even though a ceasefire is in place with Iran, tensions at sea are rising. The U.S. has intercepted an Iranian supertanker outside of the Persian Gulf. Iran has seized two ships.
- The Pentagon says that clearing mines from the Strait of Hormuz may take six months. Of course, mine clearing cannot start until the war ends. Prudent investors should note that this means disruptions in global trade for a long time.
- Initial jobless claims will be released at 8:30am ET. Consensus is 212K.
- 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 positive in Apple (AAPL).
In the early trade, money flows are neutral in Amazon (AMZN) and Nvidia (NVDA).
In the early trade, money flows are negative in 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.
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
The momo crowd is *** in gold in the early trade. This is reflected in gold ETF (GLD), silver ETF (SLV), gold miner ETF (GDX), and silver miner ETF (SIL). 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) is range bound.
Markets
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.
S&P 500 futures are trading at 7156 as of this writing. S&P 500 futures resistance levels are 7200, 7500, and 7700 : support levels are 7000, 6780, and 6600.
DJIA futures are down 229 points.
Gold futures are at $4729, silver futures are at $75.47, and oil futures are at $93.20.
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.
