By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
Game Changer
Please click here for a chart of Tesla stock (TSLA) and Apple stock (AAPL).
Note the following:
- The Morning Capsule is about the big picture, not an individual stock. The charts of TSLA and AAPL are being used to illustrate the point.
- The chart shows that TSLA stock is jumping about $20 on the announcement from China.
- The chart shows that this big jump follows the stock jump after earnings in which Tesla reported terrible numbers.
- In the Morning Capsule from April 24, we shared with you three points that were causing not only TSLA stock to jump on bad earnings but were also lifting sentiment across the entire stock market.
- Tesla accelerating development of a cheaper model
- Tesla’s plan to own and deploy a fleet of 1M robotaxis
- Tesla increasing its AI capacity
- For details, please see the referenced Morning Capsule.
- Tesla stock is jumping today as Musk scored a coup in a surprise visit to China. China has, in principle, approved Tesla Full Self Driving (FSD).
- To meet Chinese regulations, Tesla is partnering with Chinese company Baidu (BIDU) for mapping and navigation. BIDU has been on the Arora AI stock list. The Tesla deal has triggered a buy signal. There will be a separate post with details of the signal. To learn about the trigger event screen of the ZYX Change Method, please click here.
- Tesla’s deal in China is also lifting AAPL stock. Tesla’s deal indicates a reduction in the China risk for Apple. Also helping Apple is a broker upgrade.
- On the negative side, the European commission has designated iPadOS as a gatekeeper under DMA. This indicates that the regulatory pressure on Apple is ratcheting up, which is a negative.
- The chart shows when the Arora signal was given to hedge AAPL stock. The hedge is nicely profitable. A signal has triggered to take partial profits on the hedge. There will be a separate post.
- The move up in TSLA and AAPL is lifting the sentiment across the entire stock market.
- Apple will be reporting earnings on Thursday. Apple earnings have the potential to move the entire stock market. A separate post titled “Potential AI iPhone Ahead – Apple Earnings Also Ahead – Institutions Are Selling” was published in ZYX Buy this morning, providing you with more details and guidance.
- Treasury refunding announcement is ahead. The last Treasury refunding announcement caused big stock and bond market rallies as the Treasury designed it specifically to rally the stock and bond markets. We will be carefully reviewing the Treasury announcement. There will be a post only if that announcement will likely have a major impact.
- 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.
Japan
Overnight, Japan intervened in the forex markets to prop up the yen. There was significant volatility causing about a six point range in yen trading. For a currency, this is a big range. This is the first Japanese intervention since 2022.
Japanese intervention is also creating positive sentiment.
Magnificent Seven Money Flows
In the early trade, money flows are positive in AAPL, Amazon (AMZN), and TSLA.
In the early trade, money flows are neutral in Microsoft (MSFT) and Nvidia (NVDA).
In the early trade, money flows are negative in Alphabet (GOOG) and Meta (META).
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 *** 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
There is disappointment that bitcoin (BTC.USD) was not run up by bitcoin whales taking advantage of the low liquidity over the weekend.
Those who fell prey to bitcoin halving pitches orchestrated by bitcoin whales and bought bitcoin over $70,000 are now sitting on losses. Of course, members of The Arora Report who listened to the podcast titled “BITCOIN HALVING – SIX SECRETS WHALES DO NOT WANT YOU TO KNOW” knew in advance that this was the most likely income.
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 $2344, silver futures are at $27.51, and oil futures are at $83.21.
S&P 500 futures are trading at 5145 as of this writing. S&P 500 futures resistance levels are 5210, 5256, and 5400: support levels are 5020, 4918, and 4852.
DJIA futures are up 46 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.
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This post was just published on ZYX Buy Change Alert.
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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.
