Fed Minutes Ahead, China Tells Funds To Not Sell Stocks, Intel Deal Scrapped Because Of China

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

Fed Minutes

Please click here for a chart of VanEck Semiconductor ETF SMH.

Note the following:

• Semiconductors are the leading sector and prime beneficiaries of the artificial intelligence frenzy.
• The chart shows when NVIDIA Corp NVDA earnings were reported.
• The chart shows that semiconductors took off when Nvidia guided $11B of revenue vs. $7B consensus.
• The chart shows a downward sloping trendline as part of consolidation after a big run up in semiconductors.
• The chart shows that semiconductors touched the top band of the support zone before it bounced.
• Semiconductor ETF SMH is in both Model Portfolios in ZYX Allocation Alert.
• Semiconductors are the ‘picks and shovels’ plays to generate profit from artificial intelligence. At the present time, semiconductor picks and shovels plays are the best stocks to invest in artificial intelligence. Those who want a deeper understanding and next-level information will find several podcasts in Arora Ambassador Club on this subject.
• In a new development related to semiconductors, Intel Corporation INTC is scrapping its deal to buy Israeli semiconductor company Tower Semiconductor Ltd TSEM. The buyout did not receive Chinese approval. The deal has fallen casualty to worsening U.S. China relations. 
• The Chinese government is telling large investment funds to not be a net seller of stocks. Yesterday we shared with you that Peoples’ Bank of China has lowered its interest rates.  We previously shared with you that the Chinese government was consulting stock market experts on ways to run up the stock market.
• The Chinese government is trying to turn negative sentiment about its economy to positive. One of the best ways for a government to create positive sentiment about the economy is to run up the stock market. This is also done by the U.S. government without being explicit. The difference is that the Chinese government is very open and explicit about their attempts to run up the stock market.
• Fed minutes will be released at 2pm ET.
• In The Arora Report analysis, the economic data released since the Fed meeting has made these Fed minutes obsolete. However, be alert as they may move the markets. 
• 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.

Housing

Housing starts came at 1.452M vs. 1.446M consensus. This data is very strong. However, building permits are a leading indicator and are reflecting the drop in home builder sentiment we shared with you yesterday in the Afternoon Capsule. Building permits came at 1.442M vs. 1.460M consensus.

India

There is significant concern that India, China, Russia, and Brazil want to reduce dominance of the dollar. For the first time ever, India and U.A.E. conducted a large oil trade with India making payment for oil in rupees. Traditionally, oil payments are made in dollars.   

Magnificent Seven Money Flows

In the early trade, money flows are positive in NVIDIA Corp NVDA and Microsoft Corp MSFT.

In the early trade, money flows are negative in Amazon.com, Inc. AMZN, Alphabet Inc Class C GOOG, Meta Platforms Inc META, Tesla Inc TSLA, and Apple Inc AAPL.

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

Momo Crowd And Smart Money In Stocks

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

Gold

The momo crowd is inactive 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 GLD. The most popular ETF for silver is iShares Silver Trust SLV. 

Oil

API crude oil inventories came at a draw of 6.195M barrels vs. a consensus of a draw of 2.050M barrels.

The momo crowd is buying 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 USO.

Bitcoin

Bitcoin BTC/USD is range bound.

Markets

Our very, very short-term early stock market indicator is negative. 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.

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 holding 🔒 in cash or Treasury bills 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.  To see the locked content, please click here to start a free trial.

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 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 2008 financial crash, the start of a mega bull market in 2009, the COVID crash, the post-COVID bull market, and the 2022 bear market.  Please click here to sign up for a free forever Generate Wealth Newsletter.