Nvidia (NVDA) Falls Below Trendline, Fed's Waller In No Rush To Cut Rates

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

Nvidia Falls

Please click here for an enlarged version of the chart of NVIDIA Corp NVDA.

Note the following:

• This article is about the big picture, not an individual stock.  The chart of NVDA stock is being used to illustrate the point.
• The chart shows that NVDA has fallen below the trendline.
• If NVDA decisively closes below the trendline, that would be a negative for NVDA and tech stocks.
• NVDA is the most important stock for this stock market as Nvidia is the center of the AI revolution.  For more details of the chart, please read yesterday’s Morning Capsule.
• The momo crowd is ignoring NVDA’s fall below the trendline.
• The Fed’s Christopher Waller sees no rush to cut interest rates.  He sees recent inflation data as disappointing and wants to see better inflation numbers prior to making the first rate cut.  Waller said, “[the data] tells me that it is prudent to hold this rate at its current restrictive stance perhaps for longer than previously thought to help keep inflation on a sustainable trajectory toward 2%.”
• University of Michigan Consumer Sentiment will be released at 10am ET.  This may be market moving.
• New economic data will be released Friday at 8:30am ET.   The market reaction will come on Monday as the market will be closed tomorrow for Good Friday.
  • PCE, the Fed’s favorite inflation gauge.  Consensus is 0.4% for Headline PCE and 0.3% for Core PCE.
  • Personal income.  Consensus is 0.4%.
  • Personal spending.  Consensus is 0.4%.
• Initial jobless claims came at 210K vs. 213K consensus.  This indicates that the jobs picture remains strong, especially at the low end.
• Q4 GDP - Third Estimate came at 3.4% vs. 3.2% consensus.  This indicates that the economy continues to be strong.
• Q4 GDP Deflator - Third Estimate came at 1.6% vs. 1.7% consensus.
• Expect cross currents from quarter end window dressing and rebalancing to continue. Please see yesterday’s article for more details.

Magnificent Seven Money Flows

In the early trade, money flows are positive in Amazon.com, Inc. AMZN and Alphabet Inc Class C GOOG.

In the early trade, money flows are neutral in Microsoft Corp MSFT and Meta Platforms Inc META.

In the early trade, money flows are negative in NVDA, Apple Inc AAPL, and Tesla Inc TSLA.

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 inactive in the early trade.

Gold

Gold is hitting a new high.  

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 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 above $70,000.  Bulls are hoping that whales will take advantage of low liquidity during the holiday weekend to run up bitcoin.

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.