Author: The Arora Report

To gain an edge, this is what you need to know today.

Artificial Intelligence Change You Need To Know

Please click here for a chart of Palantir Technologies Inc (NYSE:PLTR).

Note the following:

• This article is about the big picture, not an individual stock. The chart of PLTR stock is being used to illustrate the point.
• One of the keys to The Arora Report’s successful strategy is identifying change early. Those investors who identify a change early always come out ahead. The premise behind the ZYX Change Method is that the most profits are generated with the lowest risk by successfully predicting change before the crowd.
• The chart shows that PLTR, a popular artificial intelligence stock, ran up going into earnings.
• The chart shows that the move up yesterday was on heavy volume. There is a large group of investors in the stock market that follow only traditional technical analysis and has no comprehension that traditional technical analysis no longer works as well as it used to. Please click here to see the reasons.  In traditional technical analysis, volume means confirmation.
• The chart shows that the move up yesterday was on high volume.
• The buying yesterday was mostly by the momo crowd on hopium and by the followers of traditional technical analysis on volume confirmation.
• The chart shows a big drop after earnings. It is a reminder that earnings are always a risk event. Results can be in either direction.  It is also important to know that the momo crowd always buys ahead of earnings on hopium.
• PLTR reported great earnings. Here are the details:
  • PLTR reported revenues of $634M vs. $615M consensus. The revenues are up 21% from a year ago.
  • The company reported adjusted operating income of $226M vs. $200M consensus.
  • PLTR was originally focused on government and defense business but is now increasingly capturing commercial business.
  • PLTR generated commercial revenue of $299M vs. $292M consensus. This represents a 27% increase from the prior.
  • The government revenue came at $335M vs. $322M consensus. This represents a growth of 16%.
  • The company is very upbeat, and commentary about the future is very positive.
  • The company is guiding full year revenue to $2.677B – $2.689B vs. the prior range of $2.652B – $2.668B.
• PLTR stock is being hit for two reasons:
  • It is an expensive stock.  If it was not for the momo crowd,  the stock would have been trading much lower in the first place. The drop in the stock shows that now at least some investors are paying attention to valuation and are willing to take on the momo crowd.
  • As good as earnings and projections are, there is deceleration in commercial business growth. This shows that prudent investors who dig into the details of the hard numbers, especially growth, are willing to take advantage of the strength in AI stocks and sell.
• The drop in PLTR stock represents for the first time a new change in how smart money is now willing to take on the momo crowd.  
• Another important observation for prudent investors today is on NVIDIA Corp (NASDAQ:NVDA). Here again, just like Palantir, a change is underway. This morning, there was an upgrade by a major Wall Street bank, but the stock is falling in the pre market. The reason is that those in the know were buying yesterday on the hopes of selling today to the segment of the momo crowd that depends on free media. This is the first time this commonplace phenomenon is coming to the premium AI stock – King Nvidia.  A famous investor who is part of smart money recently reduced his stake in NVDA stock. Prudent investors need to remember that once the mania phase is over, the segment of the momo crowd that depends on free media often becomes the fodder for smarter players.
• As full disclosure, NVDA and PLTR are both in ZYX Buy by The Arora Report. 
• Among earnings of note, Walt Disney Co (NYSE:DIS) is falling on earnings. Whisper numbers had ratcheted up going into earnings. Earnings are good but are less than whisper numbers. As full disclosure, The Arora Report has given a signal on Disney with a buy zone, recommended quantity, and target zone.  

Magnificent Seven Money Flows

In the early trade, money flows are positive in Apple Inc (NASDAQ:AAPL) and Alphabet Inc Class C (NASDAQ:GOOG).

In the early trade, money flows are neutral in Amazon.com, Inc. (NASDAQ:AMZN).

In the early trade, money flows are negative in Meta Platforms Inc (NASDAQ:META), Microsoft Corp (NASDAQ:MSFT), NVDA, and Tesla Inc (NASDAQ:TSLA).

In the early trade, money flows are mixed in SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust Series 1 (NASDAQ:QQQ).

Momo Crowd And Smart Money In Stocks

The momo crowd is buying stocks in the early trade. Smart money is inactive in the early trade.

Gold

The momo crowd is buying gold in the early trade. Smart money is inactive in the early trade.

For longer-term, please see gold and silver ratings.

The most popular ETF for gold is SPDR Gold Trust (NYSE:GLD). The most popular ETF for silver is iShares Silver Trust (NYSE:SLV). 

Oil

Oil is volatile on conflicting reports from the Middle East.

The momo crowd is like a yoyo in the early trade. Smart money is inactive in the early trade.

For longer-term, please see oil ratings.

The most popular ETF for oil is United States Oil ETF (NYSE:USO).

Bitcoin

Bitcoin (CRYPTO: BTC) is range bound.

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 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.

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.

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.

This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.

To gain an edge, this is what you need to know today.

Financial Conditions Ease

Please click here for an enlarged chart of crude oil futures.

Note the following:

• Oil is most sensitive to developments in the Middle East.
• The chart shows that oil is falling after an Iranian attack on Israel.
• The chart shows that oil is consolidating around the upper trendline.
• The best of all scenarios is playing out in the Middle East.
  • Although there are contradictory reports, it is near certain that Iran informed Turkey and Turkey informed the U.S. of the Iranian attack in advance.
  • The reason Iran informed the U.S. in advance is because Iran’s purpose was to show force and save face but not inflict much damage and for the U.S. to restrain Israel.
  • The advance notice allowed the U.S. and Israel to shoot down 99% of about 300 drones and missiles, resulting in very little damage.
  • Iran issued several statements that the operation was concluded.
  • Biden is working hard to restrain Israel.
  • Not only is oil down, stocks are being aggressively bought on the best Middle East scenario being played out.
• In The Arora Report analysis, Iran’s response to directly attack Israel has increased risks in the long term, especially without a robust response from Israel.
• Further, in The Arora Report analysis, Iran is buying time to build its nuclear capability.
• The momo crowd, being in a celebratory mood, is oblivious to several negative developments as outlined below:
  • A market research firm with a good track record is projecting that Apple Inc (NASDAQ:AAPL) iPhone shipments fell about 10% in the last quarter. Apple shipped 50.1M iPhones according to this report. The consensus from Wall Street analysts is 51.7M iPhones. This is the worst drop in Apple iPhone shipments since the COVID lockdown.
  • As full disclosure, Apple is in the ZYX Buy Model Portfolio from The Arora Report and is long from $4.68. The prior Arora call has been to hedge the Apple position. Stay tuned for the plan on hedges and the potential change in the buy zone.
  • Tesla Inc (NASDAQ:TSLA) is laying off 10% of its workforce. At the same time, Tesla is cutting the price for Full Self-Driving subscription to $99 from $199. In The Arora Report analysis, this is a brilliant move by Musk.
• New economic data shows good news for the economy but bad news for the momo crowd. After a brief hiatus, the U.S. consumer is back on a spending binge. Since the U.S. economy is 70% consumer based, prudent investors pay attention to retail sales.  Here are the details:
  • Headline retail sales came at 0.7% vs. 0.4% consensus.
  • Retail sales ex-auto came at 1.1% vs. 0.5% consensus.
• In The Arora Report analysis, to control inflation, it is important that financial conditions do not become too loose. The root cause of financial conditions becoming too loose is Fed chair Powell. Due to the high importance of this matter, we are starting work on a podcast on this subject. Powell is trying his best to loosen financial conditions by jawboning at a time when the data clearly shows that Powell should be trying to tighten financial conditions. Conservative analysts are concluding that Powell is acting this way to help with Biden’s re-election. Trump has said that he will not reappoint Powell.  
• If retail sales continue to be strong, it argues against cutting rates at all. In The Arora Report analysis, the data so far shows that even a rate hike should be on the table. None of this is good for the stock market. However, keep in mind that the stock market is controlled by the momo crowd, and the momo crowd does not do any deep analysis. 

Magnificent Seven Money Flows

In the early trade, money flows are positive in Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc Class C (NASDAQ:GOOG), Meta Platforms Inc (NASDAQ:META), Microsoft Corp (NASDAQ:MSFT), and NVIDIA Corp (NASDAQ:NVDA).

In the early trade, money flows are negative in AAPL, TSLA

In the early trade, money flows are positive in SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust Series 1 (NASDAQ:QQQ).

Momo Crowd And Smart Money In Stocks

The momo crowd is aggressively buying stocks in the early trade. Smart money is inactive in the early trade.

Gold

The momo crowd is like a yoyo in gold in the early trade. Smart money is inactive in the early trade.

For longer-term, please see gold and silver ratings.

The most popular ETF for gold is SPDR Gold Trust (NYSE:GLD). The most popular ETF for silver is iShares Silver Trust (NYSE:SLV). 

Oil  

The momo crowd is selling oil in the early trade. Smart money is inactive in the early trade.

For longer-term, please see oil ratings.

The most popular ETF for oil is United States Oil ETF (NYSE:USO).

Bitcoin

Bitcoin (CRYPTO: BTC) fell like a rock when the news of Iran’s attack on Israel broke. For prudent bitcoin investors, this busts the popular myth propagated by bitcoin whales to lure in retail investors that bitcoin is a hedge against geopolitics.   

Protection Band And What To Do Now

It is important for investors to look ahead and not in the rearview mirror.

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.

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.

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.

This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.

To gain an edge, this is what you need to know today.

AI As Consequential As Electricity

Please click here for an enlarged version of the chart of JPMorgan Chase & Co (NYSE:JPM).

Note the following:

• This article is about the big picture, not an individual stock. The chart of JPM stock is being used to illustrate the point.
• JP Morgan is the largest U.S. bank. Its CEO Jamie Dimon is the most influential banker in the world. Prudent investors pay attention to what Jamie Dimon says.  Prudent investors recognize that Dimon has access to more private data than almost anyone else.
• Jamie Dimon said, “We are completely convinced the consequences will be extraordinary and possibly as transformational as some of the major technological inventions of the past several hundred years: Think the printing press, the steam engine, electricity, computing and the Internet, among others.”
• The trendline on the chart shows the strong up move in JP Morgan stock since the last earnings.
• A quick look at the JPM chart shows that JPM is doing significantly better than popular stocks such as Apple Inc (NASDAQ:AAPL) and Tesla Inc (NASDAQ:TSLA).
• JP Morgan will kick off the earnings season on Friday, April 12.
• As full disclosure, JPM is in the ZYX Buy Model Portfolio from The Arora Report and is long from $34.14.  
• A part of the rise in JPM stock is due to AI.  This illustrates the point that we have been sharing with you that the beneficiaries of AI are far beyond popular AI tech stocks such as NVIDIA Corp (NASDAQ:NVDA).  
• The Arora Report was one of the first to say that a fortune is to be made in AI all the way to 2030.  However, making a fortune from AI is not going to be a straight line. It will be treacherous at times. To emphasize the importance of making a fortune in AI, along the way, The Arora Report has continuously reinforced this message. The purpose of this article is to reinforce this message again with information from JP Morgan.
• The stronger your conviction about AI and the more knowledge you have, the more money you will extract from the markets. At the same time, two points are important.
  • There is too much AI hype. This over-hype can cause you losses.
  • There are also many gurus calling AI a fad. You will be doing yourself a disservice by believing such gurus. 
• Here are the key points from Jamie Dimon’s letter to shareholders:
  • The importance of AI simply cannot be overstated.
  • JPM has 300 use cases in production today.
  • AI has helped JPM significantly reduce risk in retail business by reducing fraud.
  • JPM has 2500 professionals working on AI and supportive tasks.
• The markets are taking a sigh of relief that over the weekend, Iran did not attack Israel.
• In The Arora Report analysis, prudent investors should not join the momo crowd in being oblivious to the potential of a wider Middle East conflict.  In The Arora Report analysis, the response from Iran is likely to be a surprise and at a time of Iran’s choosing and certainly not based on what stock market traders think.  

Magnificent Seven Money Flows

In the early trade, money flows are positive in NVDA, Amazon.com, Inc. (NASDAQ:AMZN), Meta Platforms Inc (NASDAQ:META), and TSLA.

In the early trade, money flows are neutral in Alphabet Inc Class C (NASDAQ:GOOG) and Microsoft Corp (NASDAQ:MSFT).

In the early trade, money flows are negative in AAPL.

In the early trade, money flows are positive in SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust Series 1 (NASDAQ:QQQ).

Momo Crowd And Smart Money In Stocks

The momo crowd is buying stocks in the early trade. Smart money is inactive in the early trade.

Gold

The momo crowd is like a yoyo in gold in the early trade. Smart money is inactive in the early trade.

For longer-term, please see gold and silver ratings.

The most popular ETF for gold is SPDR Gold Trust (NYSE:GLD). The most popular ETF for silver is iShares Silver Trust (NYSE:SLV).

Oil

The momo crowd is selling oil in the early trade.  Smart money is inactive in the early trade.

For longer-term, please see oil ratings.

The most popular ETF for oil is United States Oil ETF (NYSE:USO).

Bitcoin

After the weekend hype, retail investors are aggressively buying Bitcoin (CRYPTO: BTC) ETFs. This time it is the retail buying and not bitcoin whales that is running up bitcoin. Bitcoin has moved above $72,000.

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 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.

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.

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.

This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.