To get the edge, here’s what you need to know today.
AI Rally Course
Please click here for an enlarged table of Micron Technologies Inc. IN.
Note the following:
- This article is about an overview, not an individual title. The MU stock chart is used to illustrate this point.
- Micron gains will determine the course of the AI rally. Micron’s results will be released after the close on Wednesday.
- The chart shows a widening gap after last quarter’s results were released. The bulls are expecting a similar gap this time around. However, prudent investors know that earnings are a risky event and results can go either way. Consider starting with Arora’s Second Law of Investing and Trading, which states: “No one knows for sure what will happen in the markets.” Consider following Arora’s Third Law, which states: “Making investment and trading decisions based on probabilities is the only realistic and profitable approach.” »
- The chart shows that in June, MU stock accelerated away from the trendline.
- The chart shows that MU stock last week charted a bearish engulfing candle. This is a negative model.
- Micron’s engulfing bear trend coincided with an engulfing bear trend in NVIDIA Corp. NVDA. Please click here to learn more.
- High-bandwidth memory is essential for AI data centers. As we’ve previously shared with you, Micron is out of high-bandwidth memory for the rest of the year.
- Consensus estimates for Micron’s earnings are $0.48 and revenues are $6.6 billion.
- The whispered numbers have grown and now stand at $0.55 in profits and $7 billion in revenue.
- Stocks move based on the difference between reported numbers and whispered numbers. Whisper numbers are the numbers that analysts share privately with their top clients and are often different from the numbers that the same analysts release publicly.
- The fate of AI’s rally, and therefore that of the entire stock market in the near term, depends on Micron’s earnings, projections and commentary. Historically, Micron’s CEO tends to be very optimistic.
- AI king Nvidia (NVDA) continues to decline in volatile trading after charting a negative technical trend last week. It should be noted that there was an attempted rally around 8 a.m. ET, but the rally attempt was unsuccessful. If a rally attempt is successful, it will drive the entire stock market higher.
- Cautious investors should note that NVDA stock fell despite heavy buying of the tech ETF. Selected Technology Sector SPDR Funds XLK. XLK has approximately $72 billion in assets. Last week, NVDA’s weighting was increased from around 5% to over 20%. XLK compensated by reducing AAPL’s weighting from about 21% to about 5%.
- The European Commission declared Apple Inc AAPL that as a preliminary point, the Apple App Store violates the Digital Markets Act (DMA). Investors ignore this because, in the past, regulatory violations by Apple have only resulted in slaps on the wrist. However, cautious investors should pay attention to the DMA because the DMA has teeth.
- Chicago Fed President Austan Goolsbee is optimistic that inflation data will improve as the economy shows signs of cooling.
Seven Magnificent Flows of Money
At the start of trade, monetary flows are positive in Meta Platforms Inc META And Tesla Inc. TSLA.
At the start of trading, monetary flows are neutral in AAPL, Amazon.com, Inc. AMZNAnd Alphabet Inc Class C GOOG.
At the start of trading, monetary flows are negative Microsoft Corp. MSFT and NVDA.
At the start of trading, monetary flows are mixed SPDR S&P 500 ETF Trust TO SPY And Invesco QQQ Trust Series 1 QQQ.
Momo Crowd and smart money
Investors can gain an edge by knowing the money flows in SPY and QQQ.
Investors can gain a greater advantage by knowing when smart money is buying stocks, gold and oil. The most popular gold ETF is SPDR Gold Trust GLD. The most popular silver ETF is iShares Money Trust SLV. The most popular oil ETF is US Oil ETF TO USE.
Bitcoin
Money flows into Bitcoin ETFs have cooled. This causes Bitcoin to fall BTC/USD. Bitcoin is trading below $62,000 at the time of writing.
Protective tape and what to do now
It’s important for investors to look forward and not in the rearview mirror.
Consider continuing in good existing positions for the very long term. Depending on individual risk preferences, consider a protective band consisting of cash or Treasury bills or short-term tactical trades as well as short- to medium-term hedges and short-term hedges. It’s a good way to protect yourself and participate in the rise at the same time.
You can determine your protective bands by adding liquidity to the hedges. The high level of protection is suitable for older or conservative people. The low band of protection is suitable for those who are younger or aggressive. If you are not hedging, the total level of cash should be higher than shown above, but significantly lower than cash and hedges.
A 0% protective band would be very bullish and indicate a full investment with 0% cash. A 100% protective band would be very bearish and indicate a need for aggressive protection with liquidity and hedging or aggressive short selling.
It is worth remembering that you cannot take advantage of new upcoming opportunities if you do not have sufficient liquidity. When adjusting hedge levels, consider adjusting partial stop amounts for stock (non-ETF) positions; consider using wider stops on the remaining amounts and also leaving more room for high beta stocks. High beta stocks are those that move more than the market.
Traditional 60/40 wallet
Probability-based, inflation-adjusted risk returns do not currently support strategic allocation to long-duration bonds.
Those who want to stick with the traditional allocation of 60% stocks and 40% bonds may consider focusing only on high-quality bonds and bonds with a maturity of seven years or less. Those who want to bring sophistication to their investments may consider using bond ETFs as tactical, not strategic, positions at this time.
The Arora Report is known for its precise calls. The Arora Report rightly called before anyone else the great AI rally, the new bull market of 2023, the bear market of 2022, the new stock market highs right after the virus trough in 2020, the fall of the virus 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 newsletter forever Generate wealth.
This article comes from an external, unpaid contributor. It does not represent reporting by Benzinga and has not been edited for content or accuracy.