By Nigam Arora
To gain an edge, this is what you need to know today.
Jensen Probe
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. Nvidia is extremely important for the following reasons:
- Nvidia’s AI chips are the most advanced.
- No other company can match Nvidia’s software and ecosystem.
- Nvidia has been bankrolling AI projects at a large number of other companies.
- The chart shows NVDA stock fell below zone 2 (previously support) on the response to the Blue Wave.
- The chart shows NVDA stock has fallen farther on allegations against Nvidia CEO Jensen Huang.
- RSI on the chart shows NVDA stock is oversold. Oversold stocks are susceptible to a bounce.
- In the Arora Report analysis, the key question for investors is how Huang’s alleged affair with a suspected Chinese spy will impact NVDA stock over the long term. Overall, this development is negative for NVDA stock for the following reasons:
- There is no obvious, strong successor inside Nvidia. Any sustained damage to Jensen’s credibility or leadership creates significant risk for Nvidia.
- Nvidia’s board has launched an independent investigation with outside counsel. However, given Jensen’s enormous influence and long standing relationships with the board, there are legitimate questions about how effective the investigation will be, notwithstanding the directors’ formal independence.
- Many China hawks in Washington have long been uncomfortable with Jensen’s close relationships with China and his advocacy for allowing advanced American chips to be sold there. Jensen has consistently argued that restricting chip exports to China will accelerate China’s efforts to become self-sufficient. His position is that keeping China dependent on American chips and technology is better for the U.S. over the long term. The suspected espionage connection now raises additional questions about his advocacy, although there is no public evidence that it was improperly influenced.
- Jensen has been close to President Trump. In May, when Jensen was initially left off the delegation accompanying Trump to China, President Trump personally intervened and brought him along. President Trump has continued to defend Jensen.
- Democrats have won control of both chambers of Congress and will take over in January. Congressional investigations into Jensen, Nvidia’s China relationships, and the Trump administration’s handling of the matter are increasingly likely.
- Even Republican China hawks are not giving Jensen a pass despite his close relationship with President Trump. Three Republican committee chairmen have already requested a closed door congressional briefing.
- Aside from President Trump, Jensen does not appear to have strong political allies to protect him from bipartisan scrutiny.
- This morning in the early trade, money is flowing out of NVDA and into Advanced Micro Devices (AMD). The belief is that AMD is a beneficiary of troubles at Nvidia.
- To challenge Nvidia further, Alphabet (GOOG, GOOGL) is introducing two new TPUs built for AI agents.
- There is optimism in space stocks as NASA plans to spend up to $10B for lunar delivery contracts. SpaceX (SPCX) will be a major contender. Other contenders include Firefly Aerospace (FLY), Intuitive Machines (LUNR), Lockheed Martin (LMT), Northrop Grumman (NOC), and Voyager Technologies (VOYG).
- The drop in oil this morning is bringing optimism to the stock market in the early trade. Oil is falling for the following reasons:
- There are conciliatory indications from President Trump.
- Qatar has been acting as a mediator. Qatar’s Prime Minister will meet President Trump today.
- There is a report that Iran has loosened restrictions on transit through the Strait of Hormuz.
- Consumer Price Index (CPI) will be released tomorrow at 8:30am ET and may be market moving.
- 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 Amazon (AMZN), Microsoft (MSFT), Alphabet (GOOG), Meta (META), Tesla (TSLA), and Apple (AAPL).
In the early trade, money flows are negative in Nvidia (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) stocks in the early trade. Smart money is *** stocks 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 *** 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 *** 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 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.
S&P 500 futures are trading at 7470 as of this writing. S&P 500 futures resistance levels are 7541, 7626, and 7733 : support levels are 7318, 7194, and 7032.
DJIA futures are up 626 points.
Gold futures are at $4136, silver futures are at $52.88, and oil futures are at $86.91.
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.
