Apple, Alphabet, And Meta Under E.U. Probe; Intel And AMD Banned; Fed's Bostic Says One Rate Cut

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

Threat To Tech

Please click here for an enlarged version of the chart of Intel Corp 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 Intel stock ran up on AI excitement.
• The chart shows a double top. We previously shared with you that this is a negative technical pattern.
• The chart shows a gap down on earnings. Since earnings, Intel has received about $20B in U.S. government grants and low cost loans. Intel is the largest gainer from the Chips and Science Act, a law that Biden touts as his major achievement.
• The chart shows that the big government grants failed to lift INTC stock much higher.
• The chart shows the support zone.
• The chart shows that in the premarket, INTC stock is falling below the support zone shown on the chart on China news. If the break is sustained, the support zone on the chart will become a resistance zone.
• The Arora Report has been sharing with members and readers the China risk for many popular stocks. China is banning microprocessors from Intel and Advanced Micro Devices, Inc. AMD in government computers. The Chinese government is also excluding Windows operating systems from government computers.
  • 27% of Intel’s $54B in sales is from China.
  • 15% of AMD’s $23B in sales is from China.
  • Only about 1.5% of Microsoft Corp MSFT sales are from China.
• The foregoing illustrates the risk to Apple Inc AAPL from China. About 20% of Apple’s sales are from China.
• In a major development, Apple (AAPL), Meta Platforms Inc META, and Alphabet Inc Class C GOOG are under full E.U. probe under the new Digital Markets Act.
  • Unlike many probes, this probe has a huge risk as the fines can be up to 10% of global revenues.
  • These stocks are still holding up as the momo crowd is a big buyer at these prices, and the momo crowd does not do much analysis.
• In a surprise move, an influential member of the Fed, Atlanta Federal Reserve Bank President Raphel Bostic said that now he expects only one quarter point rate cut this year. Previously, Bostic had projected two rate cuts.
  • The stock market is positioned for three rate cuts.
  • The Arora Report has previously shared with members and readers The Arora Report analysis that bringing inflation down to 3% was easy, but bringing inflation down from 3% to 2% may prove to be difficult.  Now, Bostic is saying that he is less confident that inflation will continue to fall towards 2%.  

Magnificent Seven Money Flows

In the early trade, money flows are neutral in NVIDIA Corp NVDA.

In the early trade, money flows are negative in Amazon.com, Inc. AMZN, Tesla Inc TSLA, MSFT, GOOG, META, and AAPL.

In the early trade, money flows are neutral in SPDR S&P 500 ETF Trust SPY and positive 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 buying gold in the early trade. Smart money is buying gold 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 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 seeing buying on weekend pump about bitcoin halving.  

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.