By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
New Russian Nuclear Doctrine
Please click here for a chart of Walmart stock (WMT).
Note the following:
- The Morning Capsule is about the big picture, not an individual stock. The chart of WMT is being used to illustrate the point.
- The U.S. economy is 70% consumer based. Walmart is the largest retailer in the U.S. For this reason, prudent investors pay attention to Walmart’s earnings.
- The chart shows WMT stock gapped up after earnings.
- The chart shows that WMT stock also gapped up on earnings in the prior two quarters.
- Walmart reported earnings better than the whisper numbers. Stocks move based on the difference between reported numbers and whisper numbers. Whisper numbers are the number analysts privately share with their best clients. Whisper numbers are different from the numbers the same analysts publish for public consumption.
- In The Arora Report analysis, the following are the most important points from Walmart earnings:
- Higher end consumers continue to shift to Walmart.
- E-commerce at Walmart, especially quick delivery, is growing rapidly.
- Margins are expanding.
- Walmart is gaining market share.
- In The Arora Report analysis, as good as Walmart is doing, investors need to be mindful of the very high valuation for a retailer. Walmart is trading at a trailing PE of 43. However, as Walmart’s earnings are growing, forward PE is 30, which is still expensive for a retailer.
- Walmart is in the ZYX Buy Core Model Portfolio from an average price of $19.25. Members of The Arora Report, now have a gain of 353%.
- Prudent investors also watch earnings from home improvement retailer Lowe’s (LOW). Lowe’s earnings are a reflection of the consumer, especially remodeling of existing homes. Lowe’s earnings are slightly below whisper numbers. LOW is also in the ZYX Buy Core Model Portfolio and is long from an average of $81.85. This represents a gain of 228%.
- In the early trade, markets are responding to the new Russian doctrine.
- Stocks are being sold.
- Gold and silver are being bought.
- Oil is being bought.
- The dollar is being bought.
- The yen is being bought.
- The new Russian doctrine brings the world closer to World War III. The new doctrine is in response to the U.S. allowing Ukraine to fire U.S. manufactured long range missiles on targets inside Russia.
- Prudent investors should note the following three elements of the new Russian doctrine.
- An attack on Russia by any country supported by a nuclear power will be considered a joint attack on Russia.
- A massive aerial attack could trigger a nuclear response from Russia.
- In reference to NATO, an aggression by a member of the coalition will be viewed as aggression by the entire bloc.
- In The Arora Report analysis, the new Russian doctrine is squarely directed at the U.S. The purpose appears to be to persuade Trump to stop supporting Ukraine and force Ukraine to cede territory in Eastern Ukraine to Russia. Further, in The Arora Report analysis, the ultimate solution is likely going to be the U.S. forcing Ukraine to give Eastern Ukraine to Russia as per Russian wishes. This has been a long standing Arora call. For those wanting next level information, listen to the podcast titled “THE END GAME IN UKRAINE.”
- For the first time ever, Ukraine has attacked a warehouse inside Russia using long range missiles manufactured by the U.S. The missile attack was conducted with Army Tactical Missile System (ATACMS). The missiles are manufactured by Lockheed Martin (LMT), a major U.S. defense contractor. The targeted warehouse housed ammunition and missiles from North Korea. North Korea is promising 100K troops to fight for Russia in Ukraine.
- There is no change in the protection band at this time, but we are keeping a close eye on the situation.
- 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.
Housing
New housing is beginning to weaken. Here is the just released data:
- Housing starts came at 1.311M vs. 1.34M consensus.
- Building permits came at 1.416M vs. 1.441M consensus.
Magnificent Seven Money Flows
In the early trade, money flows are positive in Nvidia (NVDA),
In the early trade, money flows are negative in Amazon (AMZN), 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 *** 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.
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 are ticking down, and bonds are ticking up.
The dollar is range bound.
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 5875 as of this writing. S&P 500 futures resistance levels are 5926, 6017, and 6131: support levels are 5748, 5622, and 5500.
DJIA futures are down 482 points.
Gold futures are at $2636, silver futures are at $31.35, and oil futures are at $68.98.
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.
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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.
