By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
10 Year In Focus
Please click here for a chart of 20+ year Treasury bond ETF (TLT).
Note the following:
- The chart shows TLT had previously touched the top band of the support zone.
- The chart shows yesterday TLT broke out above the top band of the support zone. TLT took a leg up for two main reasons:
- Treasury Secretary Scott Bessent said that Trump wants to focus on the 10-year yield to reduce borrowing costs instead of the Fed’s short term benchmark.
- The details of the Treasury funding. In yesterday’s Morning Capsule, we wrote:
In an important development, the Treasury announced $125B of securities, from 3 year to 30 year, to refund approximately $106B Treasuries maturing on February 15. So far, the stock market likes this development, and there is aggressive buying on this news.
- Rallying bonds means lower yields. Rallying bonds are also a positive for the stock market.
- Initial jobless claims came at 219K vs. 213K consensus. This data adds to the murky jobs picture. The official jobs report will be released tomorrow at 8:30am ET. The official jobs report may bring clarity to the murky jobs picture and the data may be market moving.
- Arm (ARM) is a British company. Its processor design is used in over 90% of smartphones, including iPhones. In The Arora Report analysis, ARM stock is one of the bigger beneficiaries of the future AI move to the edge. Arm is guiding $0.48 – $0.56 vs. $0.52 consensus, but whisper numbers have been much higher. ARM stock is falling on guidance below whisper numbers. In The Arora Report analysis, Arm guidance is raising a concern that the growth of AI to the edge may be slower than the market currently expects. However, Wall Street firms are coming to Arm’s defense and raising targets on ARM stock.
- Qualcomm (QCOM) earnings and guidance are better than the consensus and whisper numbers. However, the stock is under pressure on slowing smartphone growth. As the stock market is focused on slowing smartphone growth, in The Arora Report analysis, investors should look forward as Qualcomm will be a major beneficiary of AI’s move to the edge. Consider initiating a position in QCOM if it falls in the buy zone. The buy zone is in the ZYX Buy Model Portfolio. Long time members of The Arora Report have very large gains in QCOM stock.
- The reaction to earnings from Arm and Qualcomm demonstrate crosscurrents. As a member of The Arora Report, you have an advantage as The Arora Report is one of the rare resources that has a long track record of helping investors successfully navigate crosscurrents.
- Dependence on Apple (AAPL) has its perils. Skyworks Solutions (SWKS) has been a main supplier of RF components to Apple. SWKS stock is falling 28% on the news that Apple is going to shift some of its business to another vendor. In The Arora Report analysis, the other vendor is likely Broadcom (AVGO). There is a sympathy short trade on this news in Qorvo (QRVO). It is too late to short SWKS. The QRVO signal is in ZYX Short.
- Several food stocks have been under pressure, especially hard hit have been those impacted by rising prices of cocoa. This morning, sentiment is lifting on these stocks as chocolate maker Hershey (HSY) beat earnings.
- Eli Lilly (LLY) has been the best performing pharmaceutical stock due to the popularity of its weight loss drugs. LLY beat the consensus and whisper numbers and provided a very positive update on the pipeline. In the early trade, LLY stock is volatile in the premarket, having traded at low as $812.18 and as high as $875. Prudent investors need to note that the wide range in a very short time seen in LLY stock this morning is becoming typical in many many stocks. As a practical tip, in this market it is imperative to scale in and scale out. Details of how to appropriately scale in and scale out are provided in the Trade Management Guidelines. The buy zone for LLY is in the ZYX Buy Model Portfolio. Members of The Arora Report have very large gains in LLY stock.
- 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), Meta (META), and Nvidia (NVDA).
In the early trade, money flows are neutral in Microsoft (MSFT).
In the early trade, money flows are negative in AAPL, Alphabet (GOOG), 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.
Very Very Short-Term Indicator
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.
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
Bitcoin (BTC.USD) is range bound.
Markets
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.
S&P 500 futures are trading at 6102 as of this writing. S&P 500 futures resistance levels are 6131, 6256, and 6500: support levels are 6017, 5926, and 5748.
DJIA futures are up 94 points.
Gold futures are at $2879, silver futures are at $32.51, and oil futures are at $71.73.
Protection Band And What To Do Now
It is important for investors to look ahead and not in the rearview mirror. The proprietary protection band from The Arora Report is very popular. The 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.
To take a free 30-day trial to paid services to gain access to more opportunities, please click here.
This post was just published on ZYX Buy Change Alert.
Markets can generate substantial wealth for knowledgeable investors. NOW YOU TOO CAN ALSO SPECTACULARLY SUCCEED AT MEETING YOUR GOALS WITH THE HELP OF THE ARORA REPORT. You are receiving less than 2% of the content from our paid services. …TO RECEIVE REMAINING 98% INCLUDING MANY ATTRACTIVE INVESTMENT OPPORTUNITIES, TAKE A FREE
TRIAL TO PAID SERVICES.
Please click here to take advantage of a FREE 30 day trial.
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.
