CPU Demand
Please click here for an enlarged chart of Intel Corp (NASDAQ:INTC).
Note the following:
- This article is about the big picture, not an individual stock. The chart of INTC stock is being used to illustrate the point.
- The chart shows INTC stock easily rocketed past the prior psychological resistance level of $50.
- The chart shows our buy zone. We gave a signal to buy INTC stock at a time when most analysts were giving sell signals. The reason we gave a buy signal was early recognition that AI would eventually drive CPU demand and a prediction that Intel would receive more government support for its foundry business.
- Intel will report earnings after the regular session close. It is a reminder for prudent investors that earnings is always a risk event, both to the upside and the downside. In view of large unrealized gains on INTC stock, it is important to act today before the earnings release. As full disclosure, there is a new signal on INTC stock in our report.
- Economic data released this morning is very strong.
- Initial jobless claims came at 200K vs. 200K consensus.
- GDP data shows the economy is very strong. Here are the details:
- Q3 GDP Revised came at 4.4% vs. 4.3% consensus.
- Q3 GDP Deflator Revised came at 3.8% vs. 3.7% consensus.
- Yesterday afternoon, the stock and bond markets experienced a relief rally after President Trump said the U.S. had reached an agreement with Europe on a framework for Greenland and the U.S. would not impose new 10% tariffs on eight European countries. Here is the contour of the framework:
- The U.S. will get additional bases in Greenland.
- The U.S. will have total access to Greenland.
- The U.S. will have first right of refusal on mineral rights.
- Most importantly, the U.S. will build a part of the Golden Dome defense shield in Greenland.
- The Golden Dome is the most important U.S. defense initiative in decades. The U.S. government will spend hundreds of billions of dollars on the Golden Dome. The Golden Dome will provide significant opportunities for investors. Prudent investors need to get ahead of the curve.
Magnificent Seven Money Flows
Most portfolios are now heavily concentrated in the Mag 7 stocks. For this reason, it is important to pay attention to early money flows in the Mag 7 stocks on a daily basis.
In the early trade, money flows are positive in Apple Inc (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc Class C (NASDAQ:GOOG), Meta Platforms Inc (NASDAQ:META), Microsoft Corp (NASDAQ:MSFT), NVIDIA Corp (NASDAQ:NVDA), and Tesla Inc (NASDAQ:TSLA).
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
Investors can gain an edge by knowing money flows in SPY and QQQ. Investors can get a bigger edge by knowing when smart money is buying stocks, gold, and oil. The most popular ETF for gold is SPDR Gold Trust (NYSE:GLD). The most popular ETF for silver is iShares Silver Trust (NYSE:SLV). The most popular ETF for oil is United States Oil ETF (NYSE:USO).
Oil
API crude inventories came at a build of 3.04M barrels vs. a previous build of 5.27M barrels.
Bitcoin
Bitcoin (CRYPTO: BTC) is range bound.
Crypto acorn BitGo (NYSE:BTGO) priced its IPO at $18, above the price range of $15 – $17. This indicates heavy demand. How BTGO trades will be a test of current enthusiasm for cryptos. This is important because lately some of the most aggressive short term crypto players have been selling crypto and buying silver.
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 a protection band consisting of cash or Treasury bills or short-term tactical trades as well as short to medium term hedges and short term hedges. 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.
The Arora Report is known for its accurate calls. The Arora Report correctly called the big artificial intelligence rally before anyone else, the new bull market of 2023, the bear market of 2022, new stock market highs right after the virus low in 2020, the virus drop in 2020, the DJIA rally to 30,000 when it was trading at 16,000, the start of a mega bull market in 2009, and the financial crash of 2008. Please click here to sign up for a free forever Generate Wealth Newsletter.
Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.
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