Momo Buying Ahead Of CPI, iPhone 15, And ARM IPO; Auto Worker Strike Likely

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

Auto Worker Strike Likely

Please click here for a chart of General Motors Co GM.

Note the following:

• The Morning Capsule is about the big picture, not an individual stock. The chart of GM stock is being used to illustrate the point.
• The chart shows that GM stock has given up all of its summer rally gains. The reason is a potential strike by United Auto Workers (UAW).
• President Biden claims to be the most pro-union president. President Biden has been predicting that UAW will not strike.
• In The Arora Report analysis, the probability of a UAW strike is very high.
• UAW President Shawn Fain is talking about the possibility of a simultaneous strike against GM, Ford Motor Co F, and Stellantis NV STLA.
• In The Arora Report analysis, if there is a simultaneous strike against all three automakers, it will put Michigan in a recession and will have a major negative impact on the U.S. economy.  
• The union is especially upset that new plants such as those for batteries are not unionized.
• UAW is blaming the Biden administration for giving away billions of dollars of subsidies without demanding wage standards.
• All of the foregoing is positive for Tesla Inc TSLA as Tesla is not unionized.
• On August 29, we shared with you:

Today, Tesla (TSLA) is turning on a massive NVIDIA Corp NVDA cluster consisting of 10,000 H100 GPUs. The cluster will be used to train FSD (Full Self-Driving). Tesla is also spending $1B to build its own Dojo supercomputer.

• There is heavy buying in TSLA stock in the early trade as a Wall Street bank highlights Dojo and states that Dojo can add up to $500B in value to Tesla.
• The momo crowd’s pattern is to buy ahead of events, ignoring the risk. The reason is that the momo crowd believes that every event that is ahead is going to run up the stock market. In the early trade, the momo crowd is aggressively buying stocks ahead of several events.
  • CPI will be released on September 13 at 8:30am ET, followed by PPI on September 14 at 8:30am ET.
  • The iPhone 15 launch is ahead. Historically, Apple Inc AAPL stock runs going into the launch and is sold after the launch.
  • There is very heavy demand for ARM (ARM) IPO. The IPO is five times oversubscribed. The price is likely to be raised.
  • Oracle Corp ORCL reports earnings after the close today. Adobe Inc ADBE reports earnings on Thursday after the close. The momo crowd is excited about the AI potential of these two companies.
• 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.

Japan

The Japanese currency yen and Japanese bank stocks are surging on a comment by Bank of Japan (BoJ) Governor Kazuo Ueda indicating that Japan could soon move away from negative interest rates.

As a full disclosure, there are positions in the Japanese yen ETF and a Japanese equity ETF in ZYX Allocation Model Portfolio by The Arora Report.

Vietnam

President Biden just completed a successful trip to Vietnam as the U.S. tries to peel Vietnam away from China.  The two countries are agreeing on cooperating in AI, cloud computing, and semiconductors. Executives from Alphabet Inc Class C GOOG, Intel Corporation INTC, Marvell Technology Inc MRVL, Boeing Co BA, and GlobalFoundries Inc GFS attended an important summit. Boeing received a big aircraft order.

Vietnam offers a great opportunity for long term investors. The ETF of choice is VanEck Vietnam ETF VNM.  Buy zones and ratings are in ZYX Emerging by The Arora Report. The Arora Report has continuously covered Vietnam for 16 years.

Magnificent Seven Money Flows

In the early trade, money flows are positive in Amazon.com, Inc. AMZN, Nvidia, Microsoft Corp MSFT, Alphabet, Meta Platforms Inc META, Tesla, and Apple.

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 🔒 in the early trade. To see the locked content, please click here to start a free trial.

Gold

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

The momo crowd is buying oil in the early trade. Smart money is 🔒 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 🔒. 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.

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.